June 19, 2018 / 7:59 AM / 9 months ago

McCarthy shares drop 22 percent on profit warning, CEO departure

(Reuters) - Shares of McCarthy & Stone Plc (MCS.L) fell 22 percent on Tuesday to a record low after forecasting a drop in full-year profit and said its chief executive officer, Clive Fenton, would step down.

The UK’s biggest builder of homes for retirees said there had been a noticeable decline in reservation rates as customers have become more cautious because of ongoing economic uncertainty.

“Since Brexit, in the absence of any government support and now with the additional challenges posed to the business by the proposed ban on ground rents, it is clear that the Group must embark on a new strategy to carry it safely through the next five years and beyond,” Fenton said in a statement.

The company said it expected a full-year operating profit in the range of 65 million pounds and 80 million pounds compared with 96 million pounds reported last year.

“The slower pace of activity in the second-hand market combined with slightly softer prices has meant the group will miss its H2-biased results this year,” said Peel Hunt analysts, who have a “buy” rating on the stock.

The Bournemouth-based company said it started a strategic review in April led by Chairman Paul Lester to focus on improving margins.

Shares of the company were down 15.6 percent at 110.2 pence in early trading on the London Stock Exchange. The stock had lost 17.3 percent in market value so far this year as of Monday’s close.

Reporting by Muvija M in Bengaluru; Editing by Amrutha Gayathri

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