Spotless reaffirms forecasts, can’t explain share sell-off

Cleaning and catering group Spotless has seen its shares rebound 5pc after it reaffirmed its earnings outlook.

Spotless CEO Martin Sheppard with group chairman Margaret Jackson.

Besieged cleaning and catering group Spotless has been forced to reaffirm its earnings outlook after a sharp sell-off in its stock last week, with the response driving a share price resurgence.

The group’s shares tumbled 10 per cent on Thursday on strong volumes despite no obvious catalyst, sparking a price query from securities regulators.

In its response to the ASX query, Spotless (SPO) said it could find “no explanation” for the slump, adding it still expected to report a 10 per cent fall in its full-year profit, as indicated in February.

“Spotless affirms that, subject to economic conditions, its earnings for the financial year ending June 30 2016 are unlikely to differ materially from its previous earnings guidance as set out in Spotless’ first-half results announcements on February 23,” the group said.

Spotless added it was mulling a sale of its laundry business as part of its strategy reset, which was announced in February as its first-half profit slid 20 per cent.

“The process is at an early stage and no assurance can be given that a transaction will proceed,” the ASX-listed firm said.

Spotless has endured a rough few months on the exchange, tumbling from over $2 a share last November to as low as 93 cents in February after it warned of challenges incorporating acquisitions and tender losses.

It has since recovered marginally, but remains below its $1.60 a share listing price in 2014.

In early trade, Spotless shares rose 5.3 per cent to $1.14.