Retailer Blacks Leisure has been hit by a negative note from Seymour Pierce. The company, which runs Millets and Blacks stores, is down 2.5p to 18.25p after the broker began coverage of the stock with a sell rating.
Seymour Pierce said it had made the move after a meeting with the company's managment. It said:
"The revamp of the outdoor stores is well underway, but we remain concerned that the business will continue to be dragged down by an ailing and unprofitable boardwear division. This, combined with deteriorating trading conditions, forecast full year losses of £4.3m and the lack of clarity over debt covenants makes us cautious on this stock."
This will all be a disappointment to Mike Ashley's Sports Direct, which holds a 29% stake in the business. Earlier this week Sports Direct, up 1.5p to 42.5p, announced it had written off around £30m on the value of its equity stakes, which also include JJB and JD Sports.
Elsewhere Johnston Press - which is due to fall out of the FTSE 250 at the close of play today - has edged up 0.25p to 12.5p following yesterday's news of director buying (800,000 at 12.25p by non-executive Ian Russell). Some analysis of this is at followthedirectors
It should also be noted that Aviva has just cut its stake in the business by around 1.5m shares to 4.79%.
Housebuilder Taylor Wimpey is also due to leave the mid-cap index tonight. But in contrast to some of its rivals, hit by downgrades from UBS and Citigroup today, its shares are moving higher. They are up 1.25p to 12.75p, a near 11% increase. Traders pointed to this week's comments by chief executive Peter Redfern in a leaked email which suggested its debt renegotiations could be completed by February.
Meanwhile Citi commented on the housebuilders:
"The housing sector has continued to endure a rough ride in the last six months with weakening volumes and prices on all fronts. Consumer confidence and unemployment are now both weighing heavily on activity, as is the tight mortgage market. None of these factors looks likely to improve in the first six months of 2009, maybe even the whole of the year.
"On the pricing front, we are now looking for a 15% decline in 2009 following an 18% drop in 2008. We see flat prices in 2010. For volumes we expect a 30% decline in 2009 after a drop of around 40% in 2008."
And UBS said:
"Armageddon becomes reality - we now forecast peak to trough (2007-09) prices down 30% and volumes down 50% (previously a 20/50 model). More land write downs seem inevitable, earnings are downgraded again, debt reduction 2009-11 is £1bn below our previous estimate and land bank lengths are cut again as [companies] defer land purchasing to pay down debt.
"While two housebuilders have renegotiated covenants/debt packages, four have yet to cross this critical hurdle. Covenant negotiations will be an ongoing concern in the first half of 2009. Only Berkeley is totally free of these issues."
