Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a1085770

Fidelity backs Carpetright recovery after crash

Fidelity's Alex Wright was one of a number of fund managers stung by Carpetright's share price crash last week.

 
Fidelity backs Carpetright recovery after crash
 

Fund group Fidelity has backed Carpetright (CPRC) to recover after last week's profit warning delivered a hammer blow to the stock.

Shares in the carpet retailer are down 41% since the company on Friday warned on full-year profits, blaming faltering consumer confidence.

Carpetright reported a 3.6% fall in like-for-like UK sales in the 11 weeks to 13 January, with flooring sales in the key post Christmas period down 7.1%. While sales in Europe were up, the group said trading had been volatile.

Carpetright's warning has sparked wider fears over the health of the UK consumer, coming on the same day as a profit warning from funeral services group Dignity (DTY), falling sales at clothing retailer Bonmarché (BONB) and news from the Office for National Statistics that retail sales fell 1.5% in December.

Analysts at Canaccord Genuity meanwhile believe Carpetright's problems can deepen, having slashed their target price on the stock from 138p to 42p, less than half the 98p level at which they were trading yesterday. Deutsche Bank analysts cut their target from 200p to 95p.

But Fidelity, one of Carpetright's biggest investors, was sanguine on the news. 

Citywire A-rated Alex Wright (pictured) holds 0.5% of his Fidelity UK Smaller Companies fund in the stock, with a 0.2% position of his Fidelity Special Situations fund and 0.3% of his Fidelity Special Values (FSV ) investment trust.

Fidelity is ranked as the third largest Carpetright investors, according to Thomson Reuters data.

Matthew Jennings, Fidelity investment director, pointed to the impact of Tapi, a rival carpet retailer set up by Martin Harris, a former Carpetright executive and the son of its founder, Philip Harris.

'The downgrade was driven by a combination of a tough UK trading environment (continuing competitive pressure from Tapi) and problems in Europe which appear to be at least partly self-inflicted,' he said.

'Both these issues should prove temporary and fade in time, allowing a store rationalisation and improvement plan to drive a recovery in margins.'

Other fund managers to have been hit by Carpetright's heavy fall last week include Alastair Mundy, who holds the stock in the Investec UK Total Return fund he runs with David Lynch.

The fund's latest annual report, covering the period to the end of May 2017, lists Carpetright as a 1% position.

Majedie Asset Management meanwhile holds a tiny Carpetright stake  in its Majedie UK Equity fund and a larger holding in its Majedie UK Smaller Companies fund, in which the Majedie Investments (MAJE ) trust invests.

Other funds invested in the stock according to their most recent reports are the JOHCM UK Growth fund, Aberforth Smaller Companies (ASL ) investment trust and Invesco Perpetual UK Smaller Companies fund.

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

More about this:

Look up the funds

  • Fidelity UK Smaller Companies A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Fidelity Special Situations A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Investec UK Total Return A Acc Net GBP
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Majedie UK Equity A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • JOHCM UK Growth B
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Invesco Perpetual UK Small Cos Eq
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the shares

  • Carpetright PLC (CPRC.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Dignity PLC (DTY.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Bonmarche Holdings PLC (BONB.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

  • Fidelity Special Values (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Majedie Investments (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Aberforth Smaller Companies (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • David Lynch
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Alastair Mundy
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Alex Wright
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

Fund managers lick wounds after Conviviality collapse

by Daniel Grote on Apr 23, 2018 at 14:05

Sorry, this link is not
quite ready yet