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MyHome lacking friends

Created:
4 July 2008
Written by:
Graeme Davies

The credit crunch is beginning to bite at MyHome International, which sells home cleaning and car repair service franchises. Potential franchisees are being hit by a lack of available credit, and with discretionary consumer spending under pressure MyHome's chances of meeting expectations for the year look slim.

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So, while interim results showed a surge in turnover from £1.8m to £4.6m, adjusted operating profits slumped from £742,000 to £479,000. The shortfall was compounded by a restructuring £3.3m charge "to streamline each of the businesses so that their focus is entirely on generating organic growth".

But organic growth may prove elusive, with new customers becoming harder to attract. In the first half of the year, 77 franchises were sold - well below management expectations - and despite more than 50 being added between April and June, management still thinks full year turnover and profits will be "materially below current market expectations".

SHARE TIP UPDATE

HighEnough

MyHome faces the double whammy of tightening credit for potential franchisees and weak consumer confidence in its end markets. This tough combination has hammered its share price, which at 9.75p is now well below our sell recommendation (29p 5 February 2008). The shares are high enough.

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