MFI goodbye !

Its what happens at Howdens that matters. MFI retail is not likely to cover drastically and will cost a lot to restructure.

The current SP is underpinned by Howdens. If we see slowdown in the secondary housing market, Howdens will suffer a serious slowdown. We have been reading about increased mortgage approvals recently, and my guess is that this is why we've seen the SP go up. What we haven't heard is at what price those housing transactions have been done, whether they are first time buyers or secondary market trades, and even if they were secondary market trades (rather than first time buyers buying a brand new house from a house builder), there is no guarantee that in this consumer spending environment people are still upgrading their kitchens! We also don't know whether Howdens have cut their prices either.

We do know that housebuilders are suffering, even in relatively defensive parts of the market. Remember the Mcarthey & stone warning the other week? This suggests to me that house sales remain tough at the higher end of the market, and the bottom end/new build will not benefit Howdens.

So, the key is Howdens performance and things still don't look too good!

This is the most shorted stock on AIM, and we could see a bear squeeze/rally as rampers come in and trade on thin volumes. But I honestly feel the situation looks dire, MFI cannot be taken over, and the key is to sit it out.

B