U.K. stocks closed slightly higher Wednesday, as Pearson PLC’s 16% plunge was offset by gains by ARM Holdings PLC, Merlin Entertainments PLC and other blue chips.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.31% closed up less than 0.1% at 6,348.42, snapping a two-day losing streak.
The worst performing shares were those of Pearson PLC /zigman2/quotes/204954587/delayed UK:PSON -0.84% . They closed down 16% for their biggest percentage drop ever after the educational publisher cut its full-year guidance, in part following the disposal of PowerSchool, FT Group and The Economist Group. Pearson also warned of challenging market conditions.
“Since the sale of [the Financial Times], Pearson generates almost all of its revenues from its education business,” said Ipek Ozkardeskaya, market analyst at London Capital Group, in a note. “With so little diversification, investors are now questioning whether the decision to sell FT was a good idea and whether the cyclical character of the education business could further damage the company’s value.”
But topping the blue-chip index was ARM Holdings PLC , with shares of the Apple Inc. /zigman2/quotes/202934861/composite AAPL +1.07% supplier finishing up 6.5%. The chip designer reported a rise in third-quarter revenue and profit, boosted by demand for a new chip used in smartphones and digital TVs.
Merlin Entertainments PLC closed 4.7% higher for the FTSE 100’s second-biggest gain. The operator of theme parks and China Media Capital said they’re setting up a joint venture to develop a Legoland Park in the Shanghai area and explore other opportunities to develop visitor attractions in China.
Other movers: Sky PLC shares gained 2.5% as the broadcaster reported a better-than-expected 10% rise in quarterly operating profit before exceptional items, a closely watched measurement of Sky’s main business performance.
Reckitt Benckiser Group PLC also rose 2.5% after the maker of Durex condoms, Clearasil acne treatment and other consumer products raised its full-year like-for-like revenue forecast.
Home Retail Group PLC /zigman2/quotes/221810778/delayed UK:HOME +0.93% dropped the most on the midcap FTSE 250 /zigman2/quotes/210598417/delayed UK:MCX -1.57% index. Shares were knocked down 16% after the owner of electronics seller Argos and home-improvement retailer Homebase warned it expects full-year profit to be slightly below the bottom end of market expectations.
“It’s fairly unprecedented for a retailer to warn on profits before the holiday season which can make or break a year,” said Jasper Lawler, market analyst at CMC Markets, in a note. “The profit warning demonstrates a clear lack of confidence in the strategy for Argos and Homebase over ‘Black Friday’.
Back within the FTSE 100, outsourcing services provider Bunzl PLC /zigman2/quotes/201880362/delayed UK:BNZL -2.16% said third-quarter revenue rose 4%, at constant exchange rates. Underlying revenue was at the same level as last year and in line with the previous three months. Its shares finished down 2.5%.