NZ stocks: Market heads south

The sharemarket's index of top 50 stocks was down today, with shares in discount retailer The Warehouse shedding still more of their value.

At 11.30am, the benchmark NZSX-50 index was down 19.39 points at 3018.58. The NZSX-All capital index was down 5.63 points at 968.18.

Morning turnover was $31.3 million, including $16.1m worth of Telecom.

Telecom was down 2c at 601, Contact Energy was down 2c at 698, and Fletcher Building was down 10c at 645.

ABN Amro Craigs broker Matt Willis said the market had been dragged lower on profit taking, albeit on slim volume.

"There's a bit of profit taking about... but if we can consolidate (the market's) recent gains at around these levels, even slightly lower, I think it would be pretty healthy," he said today.

Shares in The Warehouse seized the market's attention, slumping 16c to 309, just 5c off a six-year low, on news it would face more competition in the discount retail market.

Australia-based Woolworths has bought the New Zealand operations of Foodlands, and said it is mulling a move into the discount retail market.

"A player like Woolworths has very, very deep pockets and competing with an entity like that (for The Warehouse) is always going to be tough," Mr Willis said.

"The company is going through a bit of a re-birth and tweaking strategy a bit, and this sort of thing doesn't help them a bit," he said.

"They seem to be facing so many obstacles to getting earnings back on a growth path."

Yesterday, The Warehouse fell 12c to 325 on the news, brokers saying it would likely find the grocery sector, which it was planning to target, tough to crack with Woolworths vying for customers.

Earlier this month The Warehouse reported March quarter sales of $489 million, down 0.9 per cent on a year earlier.

Its full-year profit was likely to be between $66m to $71m, it said.

The Warehouse's share slide came among the 113 stocks traded so far today, which included 19 rises and 47 falls.

Elsewhere in the retail sector, Hellaby Holdings was down 5c at 565, Pumpkin Patch was up 2c at 276, Michael Hill International down 8c at 760, and Smith's City up 2c at 68.

NGC Holdings retreated from its all-time high, dipping 1c to 342.

Gullivers Travel lost 1c to 148, after yesterday gaining 4c, in the wake of a better than forecast March quarter profit of $3.04m. The stock was issued at 160 last December.

Shares in Sky City Entertainment shed 8c to 434. The stock has been under renewed pressure this week after it said its value could be eroded by government curbs on gambling.

Plastics company Vertex is to delist on Friday and its managing director Paddy Boyle has resigned.

These moves have come after rival Masthead secured 90 per cent of the firm, sparking a full takeover.

Other stocks on the move included: Air NZ down 2c at 148, AMP down 3c at 742, Feltex down 1c at 68, Independent Newspapers Ltd down 8c at 612, Mainfreight down 5c at 235, Pyne Guinness Corporation down 7c at 178, Urbus down 2c at 115, and Waste Management down 12c at 612.

- NZPA