Tim Clarke, chief executive of All Bar One and Harvesters pubs group Mitchells & Butlers, quit the business this morning after it lost £69 million in a disastrous bet on interest rates.
A bad bet on interest rates through a "swap contract" which had sought to protect the firm’s medium term borrowings from rising rates went badly wrong .
Profits at M&B, which operates 2,000 pubs, plunged 48% to £44 million in the six months to April, though recent trading is said to be robust. The shares dropped five per cent.
The shock M&B statement this morning was one of several to upset the stock market and fuel doubts about how far and how fast Britain's economy is likely to recover.
Retailer Clinton Cards announced this morning it has put its subsidiary chain of 223 Birthdays stores into administration, putting more than 2,000 jobs at risk.
The company said all of the Birthdays outlets would continue to trade while the administrators explored all options to secure their future. Clinton Cards, which bought the Birthdays chain in December 2004, said that in the current economic environment it could not sustain Birthd
ays' £7m annual losses.
And newspaper group Daily Mail and General Trust revealed today it has seen its half-year profits plunge by almost half due to an "unprecedented" fall in advertising revenues.
The group's pre-tax profit for the six months ending 29 March of £77million are 47 per cent down on the £144m earned a year ago. The group, which is cutting 1,000 jobs in regional newspapers said continuing cost-cutting efforts would help to offset weak advertising in the second half of 2009. It aims to save £150 million.
These miserable results added to the mood of doubt and renewed gloom about economic and business prospects, triggered by fresh fears overnight over America’s growth and unemployment prospects .
The FTSE 100 Index was down two per cent in the first hour of trading, off 83 points lower at 4385.3, after minutes from the Federal Reserve’s latest meeting included lower predictions for GDP and an increase in unemployment. Just three stocks survived the sell off in the top flight, with miners and banking stocks among those affected.
Cable & Wireless and British Land led the fallers board after posting full-year results. The slide for C&W – down 11% or 16.9p to 140.1p – came as a surprise to the market given the company reported a better-than-expected 36% rise in underlying earnings to £822 million.
