Mike Ashley’s Frasers Group’s appetite for distressed retailers continues to grow by the day.
On the menu this week was Hornby PLC (LSE:HRN), the model train maker whose roots go back to the early 1900s.
Frasers, which alongside Sports Direct has stakes in boohoo, Currys and Asos, upped its ownership stake in Hornby – whose products are already stocked in Frasers-owned GAME stores – to 8.9% per a Friday announcement.
“Hornby's portfolio of unique heritage brands are already part of GAME's product offer and we look forward to exploring opportunities to further leverage our scale in retail logistics and distribution. This is consistent with our strategy of pursuing strategic interests to enhance value for all stakeholders," said Frasers’ chief financial officer Chris Wootton.
“We look forward to exploring commercial opportunities in working together to unlock the full potential of Hornby's much-loved brands,” Hornby boss Olly Raeburn commented.
“Profit warnings have been more regular than the number 8 bus to London Victoria,” said Russ Mould, investment director at AJ Bell on Hornby.
But long-suffering Horby shares rallied to the top of the small-cap scene following the Friday announcement, adding 40% to 29.2p.
Stocks falter
Things were less encouraging for the small-cap stock market as a whole, with the AIM All-Share Index falling around 10 points, or 1.3%, to 748 across the week.
The lead index also underperformed, with the FTSE 100 closing 24 points lower, thanks largely to a midweek dip after several weak results from blue-chip companies (hello HSBC) pushed the index lower.
Weak economic growth projections from Centre for Economics and Business Research (CEBR) boss Nina Skero didn’t help either.
More risers and fallers
Yet there were some stand-out risers on the AIM market, not least Marlowe PLC (AIM:MRL).
Marlowe plc shares jumped 48%, the strongest among the AIM set, as the software firm announced the £430 million sale of some of its assets to Inflexion Private Equity.
Proceeds represented 121% of Marlowe's market capitalisation with the money earmarked to pay off debt and return cash to shareholders.
“The valuation achieved demonstrates the substantial potential within our business and will reset our capital structure, giving Marlowe strategic agility,” chairman Kevin Quinn said.
Advertising and promotions minnow SpaceandPeople PLC (AIM:SAL) hailed a better-than-expected second half of 2023, particularly from its Brand Experience arm, the launch of its 'Rock Up and Pop Up' retail kiosk service and the further recovery of its German retail business.
Sales came in at around £5.8 million, up from £4.7 million in 2022, and shares rallied 23% throughout the week.
Harvest Minerals Ltd (AIM:HMI, OTC:HMIFF) continued to pen gains after the AIM-listed fertiliser producer reported a 70,000-tonne order target for 2024 at the tail end of last week. Shares continued to ramp up another 28% this week.
Empyrean Energy PLC (AIM:EME) led the charge in the energy sector, with investors welcoming an update from the Mako field development project in Indonesia, where key commercial terms have now been approved by the government.
It is seen as a significant milestone that now allows the project operator to finalise fully termed gas sales agreements and advance the project closer to production. Empyrean shares rallied 27% as a result.
Powerhouse Energy Group PLC (AIM:PHE) shares rallied by a quarter following the announcement of a groundbreaking five-year framework agreement with National Hydrogen of Australia.
This deal marks a significant expansion for Powerhouse, as it could see its cutting-edge waste-to-energy technology deployed in Australia, Italy, Switzerland, and Hong Kong.
TomCo Energy PLC (AIM:TOM, OTC:TMCGF) witnessed a technical markdown after raising £300,000 of new funds through an equity raise process, with the proceeds providing working capital to progress its project in Utah.
Shares dipped 40%.
Shares in Horizonte Minerals PLC (AIM:HZM, TSX:HZM, OTC:HZMMF) were slashed in half following the announcement that the bill to finish its Brazilian nickel mine had almost doubled to $1 billion.
Despite the setback, Horizonte expects to spit out its first metal early in 2026, which looks optimistic given the additional cash required is yet to be found.
Lastly, it would be remiss not to mention main market-listed CAB Payments Holdings PLC (LSE:CABP), which has parted company with its chief executive after a disastrous period since it floated in July last year.
CAB has shed 70% of its value since its IPO, most of which followed a profit warning just three months after it listed.