MARKET REPORT: New blow to Royal Mail as strikes take their toll

Shares in the owner of Royal Mail fell again as postal workers prepare for another wave of strikes.

International Distribution Services (IDS) — as the parent company of the beleaguered 506-year-old company is now known — fell 3.9 percent, or 8.3 pence, to 204.3 pence after City analysts turned against the group.

In a note to clients, HSBC downgraded its rating for the stock from ‘buy’ to ‘hold’ and lowered its price target from 485p to 215p.

Analysts warned that high inflation and weak package volumes were likely to take their toll.

It was the final blow to Royal Mail as more than 100,000 postmen went on strike in a bitter battle between business leaders and the unions.

After a 14th day of strike since August over the weekend, staff will leave again tomorrow and Thursday and again on December 23 and 24.

Royal Mail – which loses more than £1 million a day – has been embroiled in a dispute with the Communication Workers Union (CWU) over pay and conditions that has left Christmas cards and presents stranded in the mail.

The company, which has been urging customers to send their mail earlier than usual because of the strikes, has accused the CWU of “running a Christmas ransom.”

But union barons claim Royal Mail bosses are ‘risking a Christmas crisis because of their stubborn refusal to treat their employees with respect’.

With little goodwill in the air and further disruptions on the way, fears for Royal Mail’s future are mounting.

With the name of the parent company changed to IDS, it is believed that the profitable international parcel delivery company Global Logistics Services (GLS) can be spun off into a successful standalone company.

That would drive Royal Mail – which dates back to 1516 and the reign of Henry VIII – adrift, with further losses amid deteriorating industrial relations.

To underscore the crisis, shares are languishing well below the 330p float price in 2013 and are down some 60 percent this year.

In the broader market, the FTSE 100 fell 0.4 percent, or 30.66 points, to 7445.97 and the FTSE 250 fell 0.5 percent, or 96.56 points, to 18819.44.

Home Reit showed little sign of being willing to back down the short seller line.

The group, which provides housing for the homeless, stressed that all allegations made by Delaware-based Viceroy Research are “baseless.”

Home Reit issued an interim dividend of 1.38 pence per share and said its accountants were conducting “enhanced audit procedures,” including a “detailed review” of the allegations.

The company is desperately trying to reassure investors after Viceroy, which is run by British activist investor Fraser Perring, released a report last month that questioned its business model and ability to collect rent.

But the latest update did little to calm nerves and shares fell 17.2 percent, or 8p, to a record low of 38.4p.

Ocado fell 2.5 percent, or 16.8 pence, to 669.4 pence after HSBC lowered the online grocer’s target price from 575 pence to 560 pence.

Sainsbury’s was down 2.2 percent, or 4.9 pence, to 221.5 pence and Currys was down 5.5 percent, or 3.85 pence, to 88.15 pence.

Marks & Spencer, meanwhile, handed over an additional board role to the chairman of property website Rightmove (up 0.04 percent, or 0.2 pence, to 549.8 pence).

Andrew Fisher, chairman of the retail giant’s remuneration committee, will succeed Andy Halford as senior independent director at the end of the year.

Marks & Spencer shares fell 3.1 percent, or 3.85 pence, to 119.2 pence.