Boots Hits Back At Sell Note
Company Anger As Bank Questions Accounting Procedures
May 19 2002
Boots has reacted angrily to a ‘sell’ recommendation issued by investment bankers Credit Suisse First Boston.
The leading healthcare retailer’s stock fell after the note called its accounting practices into question.
CSFB’s Nathan Cockrell claimed Boots has inflated its profits in the year to end-March by about 10 per cent through figure-juggling which the bank conceded has been properly declared in Boots’ annual report.
In a move which spotlights the current tension between any quoted retailers and the City, Boots issued a strongly worded rebuttal on Friday, saying that the CSFB note “contains no new information and its conclusions are incorrect. Boots’ reporting is transparent. All the information appears in our annual report and accounts, which complies with accounting standards.”
A Boots spokesman told The Guardian CSFB had made errors in its reading of Boots’ accounts. “We are very open. We are not hiding anything, we are not obfuscating, we have not been trying to create a misleading impression. The CSFB note simply misrepresents our position.”
Companies whose share price is hit by ‘sell’ recommendations have pointed out that investment banks benefit though commission on share sales by panicked customers, only for the banks clean up again if a subsequent recovery in the share price prompts investors to buy back in.
