Premier Foods shares fall, John Lewis suffers

Shares in Premier Foods, which is the maker of brands such as Hovis, Oxo, Bisto, Branston and Campbell’s Soup, lost over half their value on Friday due to reports that it is in danger of breaching its banking covenants, a report the company has denied.

Following the fall in shares, the company issued a statement to the London Stock Exchange which highlighted the company’s concern in the share price ,but the group anticipates meeting its financial covenants by 31 December.

The company is looking at ways to reduce its debts with one possibility being a major capital injection from CCMP Capital, a private equity firm.

The company’s debt built up after its acquisition of Campbell Soup’s operations in 2006 and RHM the following year. At the end of June, the company’s debt stood at £1.8 billion, which far exceeds the company’s market value of just £295 million prior to last week’s fall.

Meanwhile, John Lewis, owner of the Waitrose supermarket chain as well as the renowned employee-owned department store, has announced another fall in weekly sales as consumer confidence continues to be dented due to the financial crisis.

The retailer, which is seen as a barometer of the retail industry, reported that sales across its department stores and Waitrose supermarkets fell by 2.2% in the week to October 11.

High Street stores have suffered recently as consumers continue to cut back on spending.

According to the British Retail Consortium, price cuts and promotions have failed to stem the severe fall in sales.

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