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MARKET CLOSE: NZX 50 closes below 3000; Michael Hill loses its shine

Tuesday 8th June 2010

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New Zealand shares closed below 3000 for the first time since July 2009 after jeweller Michael Hill International (NZX: MHI ) announced the closure of half its US stores, saying it would recognise the costs in the current year.

The NZX 50 fell 41.16, or 1.4%, to 2988.97, the biggest one-day decline since May 25. Within the index, 41 stocks fell, just four rose and five were unchanged. Turnover was $80.8 million.

The broad-based sell-off pushed leading stocks to new lows. Telecom (NZX: TEL ) fell 2.7% to $1.81, the lowest close in almost two decades. Chief executive Paul Reynolds is fronting the company’s new marketing campaign, urging New Zealanders to give its glitch-plagued XT network a second chance.

Michael Hill (NZX: MHI ) fell 5.7% to 66 cents after the jewellery chain announced that carries its founder’s name, will close half of the 17 US stores it bought from a failed retailer in 2008 and forecast a full-year loss in America of US$6 million.

Closure costs of US$1.8 million including lease termination costs and staff entitlements, which will be recognised in the full-year results.

Allied Farmers (NZX: ALF ) sank 9.8% to 4.6 cents following Standard & Poor’s announcement on Friday that it cut the credit rating of its Allied Nationwide unit to B from BB- in the face of the firm’s deteriorating liquidity.

Direct Broking director David Speight said the credit downgrade will make the firm’s cost of borrowing money more expensive, and tighten up already squeezed margins. The only way to increase the margin would be to increase risk.

Kathmandu (NZX: KMD ) fell 3.7% to $1.83 after Fairfax Media reported that cashed-up founder Jan Cameron is in talks with rival outdoor clothing and equipment maker Macpac about a joint venture to take on her former business.

Sanford (NZX: SAN ) declined 3.3% to $4.15. The stock is rated ‘reduce’ by John Cairns, an analyst at Forsyth Barr, according to the ShareChat website. "We consider the Sanford share price will remain under pressure until a recovery to across-the-cycle earnings becomes more assured," Cairns said.

Fisher & Paykel Appliances (NZX: FPA ) dropped 5.5% to 52 cents and NZ Farming Systems Uruguay (NZX: NZS ) fell 4.4% to 43 cents.

Clothing chain Hallenstein Glasson Holdings (NZX: HLG ) led the handful of gainers, climbing 1.2% to $3.40.

 

Businesswire.co.nz



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