MARKET CLOSE: Shares fall led by Kathmandu; Meridian, MRP decline

New Zealand shares fell led by Kathmandu Holdings and paced by Warehouse Group after the retailers said their margins and sales were under pressure. Meridian Energy and MightyRiverPower declined as investors looked to crystalise recent gains.

The NZX 50 Index fell 31.136 points, at 0.6 percent, to 5495.812. Within the index, 23 stocks fell, 18 rose and nine were unchanged. Turnover was $134 million.

Kathmandu dropped 5.4 percent to $2.82 after the outdoor goods retailer told shareholders at its annual meeting in Melbourne that it expects first-half margins to shrink as it discounts more items to clear shelf space. Retailers, particularly those in the rag trade, have been struggling to produce earnings growth as international online sellers lure bargain hunters with cheaper products.

Meanwhile fellow retailer, Warehouse Group slipped 0.6 percent to $3.17 as it affirmed its expectation for a rise in annual earnings even as sales lag behind forecast heading into the key Christmas trading period.

"Kathmandu disappointed the market with guidance out of its AGM today and it's a little bit the same with the Warehouse really," said James Smalley, director at Hamilton Hindin Greene. "It's all about overheads versus squeezing margins."

Energy stocks, which have rallied to records in recent times as investors hunt yield in a low interest rate environment, fell as holders looked to book some profit from the recent gains. Meridian declined 1.4 percent to $1.73. MRP fell 1.5 percent to $2.985. Genesis Energy dropped 1.4 percent to $2.17.

"We're seeing a little bit of money come off the table after those nice rises," Smalley said. "The market had been up four days in a row so you're always going to have a day where investors think well enough is enough let's take a little bit off."

Fisher & Paykel Healthcare fell from a record, declining 2.4 percent to $5.62.

Ryman Healthcare rose 1 percent to $8.19. New Zealand's largest listed retirement village builder and operator posted a 13 percent gain in underlying first-half profit to $66.3 million and signaled it's on track to meet its target of a 15 percent increase in annual earnings.

Rival retirement village Summerset Group Holdings rose 1.1 percent to $2.74 and Metlifecare was unchanged at $4.35.

Arvida Group, the latest retirement village operator looking to join the bourse, has raised the full $75 million sought through an initial public offering with its shares set in the middle of its indicative range at 95 cents apiece, following strong demand from New Zealand and Australian institutions and listed companies.

NZX rose 1.6 percent to $1.24 after New Zealand's stock market operator signed a memorandum of understanding with the Bank of China to develop financial products, with a focus on the agricultural sector and capital markets.

A2 Milk Co was unchanged at 60 cents. The milk marketer has agreed to make China State Farm Holdings Shanghai the sole importer of its a2Platinum infant formula while a2 will take over the distribution in Asia's largest economy. The board has appointed David Hearn as deputy chairman following the retirement of Perry Gunner.

New Zealand Oil & Gas rose 1.5 percent to 67 cents. Bill Houston, the energy explorer’s general manager of exploration has resigned less than a year after he took up the role. The company is planning to return about $60 million to shareholders, using surplus cash as production ramps up at the Tui field, cancelling one in five of its shares to return 75 cents per cancelled share.

Fletcher Building, the construction and building supplies company, dropped 0.5 percent to $8.40. Spark New Zealand, formerly Telecom Corp, fell 1.2 percent to $3.19.

Outside the benchmark index,  Metro Performance Glass, which has more than half of New Zealand's glass processing market, rose 0.5 percent to $1.95 after it said it's on track to meet full-year prospectus forecasts as sales rose 13 percent to $31.6 million in its first two months as a listed company.

Cavalier Corp tumbled 18 percent to a more than 20-year low of 60 cents. The carpet maker and exporter expects its 2015 full-year earnings to be between $1 million and $4 million, after last month flagging normalised annual profit in the 2015 financial year will probably fall short of its forecast for a "modest increase" to the $5.8 million result it posted in 2014. It will detail its guidance at its annual meeting next Tuesday.

(BusinessDesk)