Victoria pulls rug from investors with profit warning

Flooring company Victoria has followed up a downbeat trading statement released on October 1st by issuing a full profits warning.

The company, which provided the red carpet for William and Kate's royal wedding, said: "It is already apparent that the company is likely to break even at best for the full year ending April 4th 2013, at a pre-tax level before exceptional costs. Current trading, in both Australia and the UK remains weak and significantly behind budget."

The company's interim statement is due at the end of the month.

Broker commentFollowing this news, house broker Seymour Pierce has downgraded Victoria, changing it recommendation from 'buy' to 'hold' and slashing its price target from 300p to 200p.

In a note, the broker explained: "The stock is trading below net asset value, which at the last balance sheet date was 582p. This figure, however, will be lower at the end of the full year 2013 (FY13) after exceptional costs are taken into account. Exceptional costs are expected to be more significant than those identified relating to the restructuring of the Australian Spinning mills and the proposed move to AIM at the time of the early October trading statement.

"For the time being, we are reducing our recommendation from Buy to Hold (Buy since 26 June 2012) and our price target from 300p to 200p until there is more clarity on the findings of the review and on management. Currently, Geoff Wilding, who has significant experience in the carpet industry, is acting as a temporary Chief Executive. Following this update, we are downgrading our FY13 pre-tax profit forecast from £2m to a £0.5m loss."

CM