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Profits warning at Potter publisher.

Harry Potter publisher Bloomsbury lost almost a third of its value yesterday after the firm issued a profits warning. The company admitted it had been stung by poor Christmas sales which could end up slashing full-year profits by as much as 75%.

Analysts had been hoping the publisher would bank profits of around pounds 20m, but Bloomsbury said the figure was more likely to be in the region of pounds 5m.

The stock market reacted by sending Bloomsbury shares down 29% or 90p to 220p - the lowest level since June 2003. The fall wiped pounds 66m off the value of the publisher.

On top of poor sales, the group has endured delays while trying to seal key contracts, which has affected its ability to sell on reference rights to other companies.

However, Bloomsbury insisted it could improve if a number of issues are resolved before the end of the group's financial year on December 31.

It said, 'If these major pending rights deals are completed and retail sales increase, profits before tax will be close to market expectations.'

But Roddy Davidson, an analyst at Altium Securities, said this was 'a forlorn hope'.

He said, 'This would be a staggeringly poor result against our and consensus estimates of around pounds 20m, particularly for a company which has been lauded for the reliability of its financial performance.

'We note the company also states profits before tax will be close to market expectations if pending rights deals are completed and retail sales increase - although this strikes us a forlorn hope.'

Record-breaking sales of the hardback edition of Harry Potter and the Half-Blood Prince ensured Bloomsbury banked profits of pounds 20m last year.

Its best-selling titles in the last few months included My Take by Take That star Gary Barlow, Amir Khan - A Boy from Bolton and Schott's Original Miscellany.

Bloomsbury insisted in a statement, 'The board remains confident of a satisfactory outcome for 2007.'

It looked to calm nerves by pointing out the company cash balance was expected to be 'not less than pounds 20m'.

Bloomsbury is preparing for life after Harry Potter as author J K Rowling is preparing the seventh and final title - although a release date has yet to be scheduled.

The company expects a boost on the release of the next Harry Potter film, due in cinemas in July.
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Copyright 2006 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Date:Dec 13, 2006
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