Jessops hammered by new warning

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Shares in Jessops plunged almost 70% after the photographic retailer issued its second profits warning in a month.

The company warned that a 16.3% drop in the price of digital cameras and a 21.7% fall in camcorder prices across the market had hit revenues.

A 5.2% drop in like-for-like sales for the four weeks since 28 February also prompted the group to forecast it would report a first-half loss of £8.5m.

As it issued the warning Jessops also said two executives would be leaving.

Non-executive chairman Gavin Simmons will step down from the company after its results in May, while commercial director Robin Whitbread has resigned from the board.

Sales squeeze

"Jessops is experiencing unusually tough trading conditions, driven by severe price deflation in the camera market leading to pressure on both revenues and margins," chief executive Chris Langley said.

Mr Langley also warned that the group now expected to post a full-year loss of £5m, as it expected second-half profits to come in at £3.5m.

He added that in an effort to address the group's current problems he had launched a strategic review of the business, the results of which would be given to shareholders in due course.

While unit sales have held up, Jessops has been hit by the falling price of cameras which has cut profit margins.

Over the past four weeks, the company has in fact managed to gain market share. However, like-for-like sales - which strip out new stores - have fallen and first half gross margins are expected to be around 4% lower than at the same time last year.

The latest alert comes just four weeks after the group first warned that deteriorating conditions in the market would hit its earnings for the year.

Jessops shares sank 67.7% or 31.5 pence, to end at 15p on the London market.