NZ stocks: Negative sharemarket hammers Warehouse

A punishing day for The Warehouse had a spin-off effect on other major retailers as the sharemarket tumbled into negative territory.

The NZSE40 Capital Index closed down 26.65 points, down 1.34 per cent, to 1958.74 on high turnover worth $99 million.

Warehouse shares dived 91c to a 15-month low of 617, closing at 620, following a warning that restructuring in Australia will hurt its first half profit and sales growth was stagnating in its core New Zealand stores.

Volume was high on 10 million shares worth $12.1 million.

Other retailers also stumbled - Briscoe Group slipped 16c to 260 before pulling itself up to 269 despite positive sales figures on Monday, while Hallenstein Glassons dropped 9c to 281, Pacific Retail fell 9c to 251 and jeweller Michael Hill dropped 27c to 580.

"There's now a serious question mark over (retail), particularly the rural sector and (the Warehouse's reference) to their rural shops being soft," said Andrew Kelleher of ASB Securities.

"The Warehouse has effectively been on a bit of an uptrend ever since the beginning of 1988. This represents a reasonably major challenge to that price rise."

Mr Kelleher said the price had fallen rapidly after crashing through the 650 level, noting it had been a "double whammy" of a profit warning and low sales growth.

"People will want to see some reasonably detailed analysis of these numbers to work out whether there's a one-off problem... but it's also indicative of the way the market views this kind of news at the moment."

Despite the focus on the Warehouse, Telecom proved the most actively traded stock, falling 5c to 448 on a $45.2 million turnover.

Yesterday Telecom announced a second quarter net profit of $155 million, a 3.7 per cent drop from the same period a year before but a moderate improvement on average expectations.

Other blue-chips had more luck, with Sky City clawing back 5c to 860 after a recent bout of profit-taking and Fletcher Building up 4c to 365 on $9.1 million worth of shares.

Mr Kelleher noted some big crossings in Fletcher Building from institutions today and said some portfolio shuffling might be expected after the sizeable fall on the Warehouse's price.

Elsewhere on the market, Auckland Airport lost 6c to 539 on moderate volume, Fisher & Paykel Healthcare was up 10c at 1030, AMP lost 36c to 970 after touching a fresh low of 965, and Turners Auctions was up 8c to 285.

Among the smaller stocks, troubled dental concern Software of Excellence eased 12c to a fresh low of 85 after warning last week that the company will chalk up a $2.5 million loss in the year to March 31, against earlier predictions of a break-even result.

The market was also expecting news on Genesis Research, which fell 24c, or 17.6 per cent, to 112 after a parcel of 1.17 million shares changed hands for $1.10.

Mr Kelleher said the dive was perplexing given the amount of cash the company had in the bank.

"It looks like something has happened there in terms one of the major shareholders."

There were 60 falls and 28 rises on 128 stocks traded.

Stocks fell on Wall St after giant insurer American International Group warned it had underestimated its liabilities by US$1.8 billion ($3.3 billion), rattling investors a day before a United Nations meeting that could increase the threat of war against Iraq.

The Dow Jones Industrial average fell 96.81 points, or 1.2 per cent, to 8013.01; the Standard & Poor's 500 index dropped 12.16 points, or 1.4 per cent, to 844.16; and the Nasdaq Composite lost 17.79 points, or 1.3 per cent, to 1306.

- NZPA