There is a growing feeling that DSG International - the former Dixons - could follow B&Q owner Kingfisher and cut its dividend.
This, of course, would not go down well in the City, and indeed among the company's many private investors. But Nick Bubb at Pali International believes it is inevitable. He has cut his recommendation from neutral to sell and his price target from 60p to 53p. He described the recent jump to 68p as a dead cat bounce.
"DSG maintained the 2.02p interim, despite a big first half profit setback, but that was before the disastrous trading at Christmas and the only issue now is by how much they cut the 6.85p final on June 26th," said Bubb. "Consensus is for a total of around 5.5p, but we feel that DSG will be more prudent, like Kingfisher, given the deteriorating outlook and the need to conserve cash (to cover the cost of store
closures?). We decided a month ago that DSG will pay a final dividend of just 2.02p, to give a 4p total ."
DSG closed today at 64.5p, down 3.75p.
Speaking of Kingfisher, it has edged up 0.6p to 131p after yesterday's slump, despite rating agencies S&P and Fitch both issuing negative notes on the company.
Still with retailers, the situation at Moss Bros has hotted up again. Laura Ashley and Icelandic group Baugur have both been building up stakes in the business - 5.96% and 29% respectively - and today another shareholding emerged. Credit Agricole Cheuvruex - a big player in the CFD market - declared a 7.91% stake on behalf of an unknown investor. Moss is sending out 212 notices to find out the ultimate owner, but if it is one of the two existing parties, that would beef up their chances of winning out in any bid. If it is another predator, the future of Moss Bros is blown wide open. Its shares closed 0.75p higher at 47.25p.
Overall, the downbeat Nationwide housing survey and the prospect of mortgage costs going up whatever the Bank of England decides, has hit housebuilders and mortgage banks. So the FTSE 100 has closed 24.6 points lower at 5692.9. This is a near 200 point gain on the week, which is a pretty good performance, all told.
