3 FTSE Shares Crashing To New Lows

Published in Investing on 25 September 2012

Burberry (LSE: BRBY) and Mulberry (LSE: MUL) both suffer from fashion fallout.

The FTSE 100 (UKX) is hovering around the 5,850 point mark this week, in the absence of any real economic or market news, still a little short of its 52-week high of 5,989 points. But it's still way up on its 52-week low of 4,869 points, and hopefully it will never see such lows again.

But even if the market as a whole is actually looking pretty healthy, there are always individual shares that are struggling. Here are three testing new depths right now...


Some may remember Phorm Corporation (LSE: PHRM) from a couple of years ago, when its targeted advertising technology caused a backlash from privacy champions who didn't want a third party scrutinising their browsing habits. Back then, the shares hit £30 before falling back to just £3, but I still thought you'd have to be mad to buy them.

Move forwards to today, and the shares are heading downwards again. After recovering from a year low of 65p in May, they recovered to 132p in August, but have since slid back to 80p again. The AIM-listed firm still seems to be some way away from profits, making an operational loss of around $30m a year.


Troubled fashion retailer Burberry (LSE: BRBY) slid to a new low of 1,017p today, but has since picked up a few pence to 1,021p. The shares crashed by 20% on 11 September after the firm that is so popular with the pretty young things of China reported slowing growth.

Latest forecasts still suggest a year-end price-to-earnings (P/E) ratio of around 15, with a modest dividend of not much more than 2.5% expected. Now that would be a reasonable valuation for a strongly-growing company, but we just don't know how Burberry's next update will turn out -- it's due on 11 October, and many are expecting things to deteriorate further. Burberry could be a bargain soon, but perhaps not just yet.


Fashionable leather goods purveyor Mulberry Group (LSE: MUL) has also hit the skids of late, having plummeted from nearly £25 per share in May to a near-low of £12.50 now. The AIM-listed firm has actually done very well since its flotation in 2002, but after reaching this year's impressive high, a failure to exceed expectations in June led to the all-too-familiar story of the wheels coming off an over-hyped growth story.

There is still an impressive 20% earnings per share growth forecast for this year, with even better than that next year, so it's a well-performing company. It's just that the punters had pushed the shares up way too high -- even after the recent slump, they're still on a forward P/E of 24 for the full year.

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> Alan does not own any shares mentioned in this article.

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