JOHCM's Costar reveals the sector he believes is a 'walking profit warning'

'Overstretched and underinvested'

Mark Costar, co-manager of the £388m UK Growth fund at JO Hambro Capital Management (JOHCM), has said the UK consumer staples sector will be next in the "firing line" following a string of profit warnings.

Speaking at the Morningstar Investment Conference, Costar warned the consumer goods sector was the "poster child of value destructive M&A activity" while it persistently underinvested in key areas such as marketing, product and structural development.  Despite the perception of stronger balance sheets, the manager added there was uncomfortably high leverage in the sector. Furthermore, the three pillars the sector relied on -  brand, distribution and scale - were being systematically undermined by structural factors, he said. "Brand can be built up quickly if the product or service is ...