Is there a downgrade or worse coming for Sydney-based furniture company Nick Scali? The shares fell heavily last week but the company told the ASX it had no idea why its shares had taken a sharp fall.
The shares started the week at $7.09 and fell to $5.36 at the close on Friday, a fall of $1.73 or more than 24%.
The shares lost 11% on Thursday and Friday – 5.1% on Thursday and another 5.9% on Friday.
Directors said they had no idea why the shares fell in reply to a “please explain” from the ASX. Nick Scali reported a net profit after tax of $20.5 million for the half year to December 31, up 44.7% on a year earlier.
Revenue rose 15.5% $118.4 million.” The higher sales resulted from same store sales growth of 10.1% and the contribution from new stores. Gross margins strengthened to 62.0% largely as a result of economies of scale from volume growth in our specialised categories,” directors said in February.
And looking to the rest of the year, the company said “January is traditionally the Company’s biggest trading month of the year for sales orders received and the four week trading period in January 2017 saw continued double digit growth in both total sales orders and comparative stores sales orders compared with the previous corresponding period.”
“The Company expects market conditions for the second half of the 2017 financial year to remain favourable. Nick Scali Limited’s strong balance sheet gives it the capability to continue to grow the business.”
But according to the market, something has gone wrong – the 24% slide in price last week is too large to be an accident.
Meanwhile shares in Network Ten fell 2.9% on Friday, taking weekly losses to 19% – a sharp fall that prompted a “please explain” letter from the ASX.
In a response to the query lodged on Friday, the embattled network said it wasn’t aware of any unannounced information that could have explained the recent drop except that that Lazard Asset Management and its associates have been selling out – Lazard is no longer a substantial shareholder, as a May 10 notice to the sharemarket revealed.
Network Ten is now selling for just 17 cents a share, from 93c at the start of the year. That’s equal to 1.7 cents before last year’s one for 10 consolidation.
The sell-off accelerated last month, when the company revealed a $232 million loss and said its future relies on its major shareholders guaranteeing debt, cost cuts, the abolition of licence fees and other unspecified moves in cutting programming costs. Ten is worth just $61 million.
Embattled online retailer Surfstitch has suspended its shares until late August to allow it to sort out (negotiate?) a class action claim for as much as $100 million.
The company is only valued at $19 million which means it can’t realistically agree to pay anything to litigation funder Vannin Capital and law firm Quinn Emanuel Urquhart & Sullivan who will launch the latest class action.
The claim SurfStitch of engaged in misleading and deceptive conduct and breaching its continuous disclosure obligations by overstating earnings and profit forecasts.
SurfStitch shares went into a trading halt on Wednesday, while the board assessed the claim and on Friday it requested a voluntary suspension of its shares that is will last until it presents its full year results in late August.
The company said it will explore a way to settle the claim “at a level that would permit the company’s continued financial viability”. In other words for as little as possible.
Surfstitch shares closed last Tuesday at a record low of 6.8 cents.
