By Patrick Avenell
The ASX inquiry into Clive Peeters’ share price has had a devastating effect on the retail group’s value, almost erasing all the ground it had made up over the last week.
When trading closed on Friday last week, Clive Peeters was riding high at 19.5 cents. Then on Monday morning, after responding to questions posed by ASX Markets Supervision, the share price dropped to 14.5 cents at close. Yesterday, the decline continued, down another 2.5 cents to open this morning at 12 cents. This equates to a total drop of 7.5 cents, or 38.5 per cent.
The reason for this reaction from the market is most likely Clive Peeters company secretary Steven Rowarth’s reminder to the market that the group was expecting a $1 million after tax operating loss for the September 2008 quarter. Rowarth followed this up by describing current pre-Christmas trading conditions as “very challenging”. Regardless of these challenges, a small operating profit for the December 2008 quarter is predicted.
Although Rowarth answered “No” to the ASX’ question, “Is there any other explanation that the [company] may have for the price change in the securities of the Company?”, managing director Greg Smith offered the following explanations on 9 December 2008:
-Greater proactivity in promoting the interests of the group.
-A lot of staff taking an interest in the undervalued share price.
-Consumer sentiment improving, especially after the Rudd handouts, petrol price drops and interest rate reductions.
-People feeling more comfortable about the economy.
-Overall sharemarket going up.