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St Ives – shares soar on “a much improved performance”… but that’s compared to a “materially below” profit warning

By Steve Moore | Wednesday 14 June 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Shares in marketing services group St Ives (SIV) are currently soaring higher on the back of a trading statement announcement, including that the first four months of its second half have delivered a much improved performance. However, that’s compared to a “materially below” profit warning in the first half.

There has been a return to growth in the Strategic Marketing business, but the profit warning noted “the majority of the shortfall due to the pressures within the Marketing Activation segment” - and it is updated that “trading conditions within our Marketing Activation segment continue to be very challenging” and there’s “continued pressure on operating margin” in the Books business. As such, the overall performance is “as anticipated” and “expectations for the full year remain unchanged”.

This has though seen the shares jump currently more than 30% to circa 50p – though this does follow a slump in the month to now, not helped by a 5th June announcement of a property disposal at below net book value to reduce debt.

The company argues “the balance sheet remains sound and we have the necessary cash flow capabilities to support our investment priorities and to further reduce debt”, but then also that “we continue to look for opportunities to further strengthen the group's balance sheet” and there’s no update on dividends.

Hmmm. This mixture sees me currently retain scepticism here, ahead of full-year results detail. I’ll review that with interest, but for now continue to avoid.


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