MARKET REPORT: Shares in Marshalls plunge to six-year low

Shares of the paving and landscaping firm Marshalls plunged to a six-year low as household spending on improvements was hit by a tight cost of living.

They fell 16.6 per cent, or 50.2p, to 251.8p after it said demand in the UK ‘weakened’ and internationally caused revenues in its landscape products business to fall 16 per cent in the third quarter.

To offset the decline and save money, the company has cut production to keep inventories in check, though this affected the efficiency of its factories.

And it said it had tried to combat the effects of inflation through price increases, but it hadn’t been enough to offset the accelerating drop in revenues.

It expects results for the year to be “slightly below the lower end” of current market expectations, leading to a decline in the share price.

Analysts had forecast full-year profits between £95 million and £101 million. “In recent years there has been a trend for households to dig up the front yard and replace the weeds with paving stones so they can park their cars and not have to worry about traffic controllers. As a paving stone specialist, Marshalls has enjoyed booming sales,” said AJ Bell CEO Russ Mould.

But that sales momentum was now gone as homeowners cut back on spending on repairs and improvements. “For anyone watching their money, it’s an easy decision not to throw in thousands of pounds to brighten the front disc,” Mold said.

The FTSE 100 fell 0.09 percent or 6.18 points to 6991.09, while the FTSE 250 fell 1.58 percent or 279.36 points to 17,353.28.

Sentiment was shaken after Bank of England deputy governor Sir Dave Ramsden said interest rates would likely continue to rise to curb inflation.

But better-than-expected US jobs data showed the world’s largest economy remained relatively solid, a good sign for investors seeking a cash retreat amid mounting volatility worldwide.

Another beneficiary of this flight to safety was gold, which was on track for its biggest weekly gain since March, after rising to just over $1700 an ounce from about $1660 late last week. However, the better jobs data means that the US Federal Reserve is likely to continue raising interest rates.

One of the biggest gainers on the FTSE 100 was defense group BAE Systems, which gained 3.4 percent, or 27.6 pence, to 846.2 pence after JP Morgan analysts raised their price target for the stock from 965p to 1000p.

Oil inventories also rose as Brent crude continued to rise following OPEC’s decision to cut production sharply.

Shell shares rose 1.5 percent or 33.5 pence to 2345.5 pence and BP gained 1.9 percent or 8.75 pence to 469.1 pence. Bus and train operator First Group added 0.4 percent or 0.4p to 108.9p after it received a short-term extension from the Department for Transport to continue the West Coast Partnership, which includes the Avanti West Coast railway.

The contract, which was set to expire on Sunday for a week, now runs until the end of March for Avanti to deliver an “urgent extension of services.”

Meanwhile, Sondrel, a Berkshire-based computer chip designer, revealed plans to list on AIM later this month and raise £20 million to fund its expansion plans. It has priced its shares at 55p each, giving it a market capitalization of just over £48m.

ACG Acquisition Co also planned to go public, aiming to float in the key market of the LSE and raise £112 million.

ACG is a special purpose acquisition company, a type of shell company that lists in the stock market with the intention of buying a private company, allowing the company to go public without going through the traditional listing process.