Victory fires a warning broadside

VICTORY Group, the cosmetics and jewellery company controlled by Sir Richard Branson's Virgin Group, shocked the City with a profits warning.

Net profit for the current financial year will fall 'considerably' below market expectations. House broker Seymour Pierce had been expecting net earnings to hit £4.5m.

After growth of 11% in the six months ending in September, sales fell sharply. 'They've had two bad months,' said Richard Ratner, at Seymour Pierce.

Cosmetic sales were particularly poor. However, Ratner remains optimistic that Victory can sort out its problems. The company plans to accelerate the launch of a new line of jewellery.

'This is a very focused management team,' Ratner added. Victory plans to provide further detail on new product development when it reveals interim results in two weeks' time.

The Alternative Investment Market-quoted shares lost more than one-third of their value, plunging 135p to 227½p. Fewer than 11% of the shares are in free float with Virgin retaining 89% of the equity.