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Market movers: ASOS, Sainsbury’s, Antofagasta, Stellar Diamonds, StratMin Global Resources, Summit

Last updated: 18:51 18 Mar 2014 AEDT, First published: 19:51 18 Mar 2014 AEDT

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A hefty fall from ASOS (LON:ASC) shares dragged the junior share index down on Tuesday as the online fashion retailer warned that margins would shrink as it invests in the UK, Germany and China.

The first two months of the year however were another impressive outing for the online retailer, which enjoyed a 26% jump in sales to £136.7mln.

Sales in its main market, the UK, were up 21%, while there was also strong growth in the US, up 41%, and the EU, up 57%.

Sales around the world though struggled, rising just 3% as it struggles to crack lucrative markets such as China.

It is now confident of hitting £1bn of sales this financial year.

But investments being made in the UK and Germany in warehouses and IT will take its toll on the company’s margins, it warned.

“This investment, as well as the investment in our China start-up, will reduce our EBIT margin for the current financial year to 31 August 2014 to c.6.5%,” said chief executive Nick Robertson.

“This year these costs will be disproportionately borne in H1, resulting in a likely H1/H2 Profit before Tax split of approximately 30%/70%.”

ASOS is the most valuable company on AIM by some margin. It lost £1bn of its value today, falling 17% to 5,232p but is still worth some £4.3bn.

Its share price decline hit the FTSE AIM 100 hard, with the benchmark growth index falling 2% to 3,865.

That compares to a 0.3% dip on the FTSE 100, which moved down to 6,547.

There was also big news at Sainsbury’s (LON:SBRY), where quarterly sales fell for the first time in nine years.

In the ten weeks to March 15, like-for-like sales at the supermarket group fell 3.1% stripping out petrol sales.

The company said it faced tough comparatives last year when the horsemeat scandal at Tesco and Asda saw shoppers opt for the orange-branded supermarket.

It follows a heavy loss recorded by rival Morrisons (LON:MRW), which pledged to drop its prices to compete with the discount chains such as Aldi and Lidl.

“We have seen a decline in sales in the quarter reflecting tough comparatives,” said Justin King, who quits as chief executive in July.

“This time last year our sales benefited significantly from the discovery of horsemeat in some branded and competitors' products.”

The shares opened 1.5% lower despite having already tanked 15% this year. They did however mount a strong recovery, trading 3% higher at 320p by 9am.

Antofagasta (LON:ANTO) made an early charge, up 4% to 881p even though the copper giant reported an 11.4% slide in annual revenues (US$5.97bn) and a 30% fall in underlying earnings (EBITDA).

It follows a decline in copper prices and higher costs.

The final dividend however beat estimates at 86.1 cents per share, which works out at a payout ratio of 142% of earnings. 

In the small-cap universe, Stellar Diamonds (LON:STEL) sparkled 11% higher at 2.1p. The group, which has now seen its share price leap 100% in 2014, said it continued to recover high grades and ‘exceptional’ quality stones from its Tongo kimberlite dyke project in Sierra Leone.

So far the group has recovered 551.6 carats from its bulk sampling programme at an average grade of 126.3 carats per hundred tonnes, which is higher than the estimated grade 120 carats per hundred tonnes.

Also making gains was StratMin Global Resources (LON:STGR), up 3.2% to 8.9p, after it revealed an immediate uplift in the carbon content of graphite produced following the installation of a scrubber at its Loharano project in Madagascar.

The most recent trial production batch averaged a carbon content of 90%, with some samples as high as 92% - a significant increase on the percentages achieved before the scrubber was installed (around 78%) and will mean a higher price per tonne for StratMin.

Summit Corporation (LON:SUMM) shares were also marginally up at 9.05p after the drug developer was given the go-ahead by American regulators to begin its phase-two, proof-of-concept study on a new-generation antibiotic for C.difficile infection.

The Food & Drug Administration clearance paves the way for trials to start later this half and triggers a £1.9mln milestone payment from the medical charity, the Wellcome Trust.


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