Newspaper article The Evening Standard (London, England)

Spending Cuts Fear Puts Stocks on a Diet of Woe

Newspaper article The Evening Standard (London, England)

Spending Cuts Fear Puts Stocks on a Diet of Woe

Article excerpt


ANYONE who thought the credit crunch was just a problem for the banksand borrowers will have to think again. The fallout from the subprime mortgagemeltdown not only means money is scarcer and more expensive, but will alsoforce a cutback in consumer spending.

Luxury items such as meals out, bigticket goods in the shopseven the odd pintmay have to be sacrificed. This may be the last thing on our minds as we shoptill we drop for Christmas, but sooner or later we may be forced to curb ourspending habits.

Cracks are already appearing in the stock market, and you don't have to peertoo closely to see them. Regent Inns slumped 41.5% yesterday after rocking theCity with a profits warning along with Tootsies restaurants group ClaphamHouse, which saw 40% wiped from the value of its shares.

Today Clapham House rallied 14p to 164p. But Regent Inns slipped a further13.4p to a new low of 231.4p as Charles Stanley cut its target to 28p whileInvestec has lowered its sights to just 22p. Charles Stanley says there shouldbe no doubt consumers are feeling the pinch. Investec reckons rising costs meanboth firms face a bleak future.

Italian restaurants chain Prezzo has slumped from a peak of 931.2p this year.

Today the sharesmoved off the bottom with a 1.4p tweak to 54p afternon-executive chairman Michael Carlton topped up his holding. He bought 20,000shares at a relatively cheap 531.2p to take his total stake to 920,000, or lessthan 1%.

The search is on for other companies exposed to the consumer downturn.

Take posh-cooker maker Aga Foodservice, for instance. Its shares slumped 151.4pto a new 362p low on the view that families will make do with their old cookersfor the time being.

That is bad news for a company that recently focused on the consumer end of themarket, having failed with last year's bid for rival Enodis. …

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