Three profit warnings rock the city

Yesterday, 3 profit warnings were issued by Pendragon, Signet and Sports Cafe Holdings which shocked investors and spark concerns of a significant slowdown in consumer spending following the credit squeeze.

Pendragon, whose near-400 UK dealerships trade under names such as Evans Halshaw and Stratstone, said the highly competitive new car market had forced down the price of used cars.

Furthermore, it suffered a decline in its California business due to US economic uncertainties and the recent bush fires. Shares in Britain’s number one motor dealer,plummeted 18.75p to 35.5, wiping £123 million from its stock market value. The car dealer said profits will not reach market expectations by £12 million this year and £18 million next year.

Secondly, shares in Signet, owner of the H. Samuel and Ernest Jones jewellery chains, fell 17%, or 13p, to 64p after it said trading is suffering in the UK and US as Christmas approaches, so it will miss profit forecasts this year. Terry Burman, chief executive, said that so far in November, US sales are down around 7% compared with last year. In the UK there has been a weakening as the month has progressed.

Finally, Sports Cafe Holdings, the sports bar owner, said that its outcome for the year will fall short of previous market expectations as the smoking ban and spending slowdown hit. Furthermore, it warned that added business could suffer from England’s failure to qualify for next year’s European Championship.