Authorization

Connect Group shares crash amid 'extremely disappointing' trading

Shares in WHSmith’s former news distribution arm Connect Group have crashed after it warned of “extremely disappointing” recent trading and announced the exit of senior management.
The stock tumbled more than 50pc to 28p, wiping around ?60m from Connect’s market value, as chief executive Mark Cashmore and chief financial officer David Bauernfeind stepped down.
Connect, which was previously called Smiths News, said it would no longer meet its full-year guidance that profit before tax would be between ?42m and ?45m. Though it declined to give new numbers, analysts projected its profits would be ?10m lower than forecast.
Problems at freight arm Tuffnells were at the heart of Connect’s difficulties. The company also blamed sluggish sales of World Cup-related products and spiralling costs at online collection service Pass My Parcel, which it now plans to close.
Tuffnells made a ?200,000 loss in its first half but had previously guided profits of between ?6m to ?8m in the second half. But Connect today conceded Tuffnells would slump to a loss of around ?500,000 for the final six months of its financial year.
Connect Group share price
Peel Hunt analyst Chris Bamberry said Tuffnells was suffering from a high churn of staff and a UK shortage of HGV drivers. “They were trying to fix that and clearly they are not,” he said.
Newsagent sales of World Cup-related products were expected to generate ?2m to ?3m of profit before tax from additional delivery requirements. But Connect said sales had been “disappointing”. Insiders said a decision by football sticker maker Panini to hike the price of football packs from from 50p to 80p had led to hit in demand among UK collectors.
Connect Group shares crash amid 'extremely disappointing' trading

Panini stickers for this summer's football World Cup had hit Connect's returns, the company said
Following a review of Pass My Parcel, Connect today announced a winddown of operations. The firm is in discussions “with key clients to effect as orderly a withdrawal as possible”.
Mr Bauernfeind will leave with immediate effect and be replaced by former Yodel CFO Tony Grace from June 18. Mr Cashmore will remain with the business while a successor is identified.
Connect said dividend payments would “at a minimum be substantially reduced” following its profit revisions. Berenberg analyst Eoghan Reid estimated this would lead to an 80pc cut in annual payments to shareholders.
See also:
Leave a comment
News
  • Latest
  • Read
  • Commented
Calendar Content
«    Август 2018    »
ПнВтСрЧтПтСбВс
 12345
6789101112
13141516171819
20212223242526
2728293031