There is a very obvious answer to the recent surge in the share price of retailer, Just Group.
JST shares jumped 81c last week, to a high of $4.85, and there’s a logical explanation, but it’s one that yesterday seemed to elude the company in its answer to a query about that price rise from the ASX; and I suppose the Exchange as well.
The explanation is the presence of a very rich shareholder in Solomon Lew whose company, Premier Investments, has $1.1 billion from the sale of its Coles Group shares to Wesfarmers.
When that happened early last week punters and others immediately thought literally: Solly Lew has 19 per cent of JST, plus the $1.1 billion means a bid for Just Group.
So up went the shares which had been firming anyway on expectations that the current retail boom was boosting JST’s business. That’s what the retail sales numbers from the Australian Bureau of Statistics for January and February have been telling us.
But the punting on a bid from Solly Lew was an explanation conspicuous by its absence in the change of letters by the ASX and the company, which were released yesterday.
The ASX was asking about reasons for the price rise and if they might be operational.
JST told the ASX that it doesn’t foresee a change in its earnings expectations for the full year. The exchange had asked if there was any reason to think Just’s net operating result for fiscal 2007 might vary from the prior year by more than 15 per cent.
“No, there is no reason to think that there may be a change of more than 15 per cent in the net operating result attributable to members for the full year ended 31 July 2007 from the previous corresponding period,” it said.
Just also said it did not expect to record any material abnormal or extraordinary items for the year but could not explain a rise in its share price to a high of $4.85, from $4.06 at the close of trading on Monday April 2.
But Just said in its reply that a decision by the Reserve Bank last week not to raise interest rates may have been perceived as positive news for the company, as well as February retail trade figures showing an 8.4 per cent lift in the clothing category from the same month in 2006.
If we are to believe those reasons, then why hasn’t the whole retail sector exploded, leaving aside the intense takeover action around Coles and the spillover into other stocks, such as JST.
Premier Investments jumped from around $7.40 before the Wesfarmers approach to Mr Lew and the move on Coles were revealed, and peaked at a high of $9 before easing to $8.80 yesterday.
So what about other retail plays involving Mr Lew?
At Colorado where Mr Lew has a blocking 10 per cent or so stake to stop that HK private equity buyout from Affinity Equity Partners, there was no price spike in the past week.
Nor was there at Country Road where he also has a blocking stake, until yesterday when someone bought 100 shares and the CTY shares jumped 6c to a 52 week high of $2.21.
The explanation from Just group sounds a bit feeble, so we wonder why neither party mentioned Mr Lew.
