You are here:

Springs pop at Land of Leather

Created:
19 June 2008
Written by:
Graeme Davies

Land of Leather, the furniture retailer, said it plans to raise £13.5m via a placing in order to allow the company to continue trading through 'challenging' market conditions. But in contrast, figures out today suggest that retail sales generally surged dramatically in May.

Advertising

Land of Leather's cash call will be preceded by a ten-into-one share consolidation, so the proposed 50p a share issue price translates to 5p - just below the current share price, which gives the group a market value of just under £3m. That's the equivalent of 2,500 of its Tonya electric reclining sofas, which retail for £1,199 each. And it's not so much dilution as wipe-out: post-consolidation, the company will have 4.99m shares in issue, but is proposing to issue 29m new ones, equivalent to six times its existing capital.

Business is dire, and likely to remain so well into 2009. Like-for-like sales over the past six weeks have slumped by 35 per cent compared with the same period last year. But the company says it is on course to make pre-tax profits of not less than £2m for the year to 3 August, and has secured support from trade insurers and its clearing bank. The proceeds are to be used for working capital, but there's a stark warning that should the placing - which is not underwritten - fail to come up with the goods, "the company is unlikely to be able to continue to trade in its current form".

Similar problems are apparent at rival ScS, whose trade finance insurers have also pulled the plug, and it is also expected to have to raise funds soon.

■ Such depressing news from the big-ticket retailers is at odds with the surge in high street spending in May, when the clement whether seems to have persuaded Brits to splash the cash, or max the plastic, once more time. Retail sales leapt by 3.5 per cent in May, according to National Statistics, boosted by warm weather at the start of the month. The figure was described by various commentators as "staggering" and "astounding", and shortens the odds still further on an interest rate rise. It's just as we predicted, though - see yesterday's 'Consumers choose fashion over furniture'

IC VIEW

Sell

  • Back to top

Products and Services from Barclays Stockbrokers.

The UK’s No.1 Stockbroker

Stocks and Shares

Contracts for Difference

Financial Spread Trading

Gilts and Bonds

Funds Market

FX

Education Centre

Trading Simulator

Advertorial Feature

Take control of your investing with CFDs

Have you ever watched a move in the markets that you saw coming, but you weren't able to exploit?

by Dominic Picarda

Advertorial Feature

Spread your risks with spread trading

With so many big moves in the world's financial markets, there have seldom been more opportunities around for spread traders. Isn't it time you joined them?

by Dominic Picarda