FTSE 100 fallers: why is the Pearson and Carnival share price tumbling?

Pearson’s share price continues to struggle after issuing a profit warning last week due to weaker-than-expected print sales in its third quarter, while fellow blue-chip Carnival Corporation & PLC (US) has also seen its stock slide after slashing its earnings forecast.

Pearson profits hit by students ditching print products

Last week, the British educational publishing company warned investors that its full-year profits will likely come in at the bottom of its guidance range, prompting its share price to fall 14%, with the company's stock down 20% since January. Pearson's stock has underperformed compared with the rest of the market, with the FTSE 100 up 10% on a year-to-date basis.

The profit warning came after the company reported weak sales in its US higher education courseware unit, with adjusted operating profit expected to hit £590 million, rather than the £640 million it originally targeted.

The publishing company blamed the sales slump on students ditching print products in favour of digital educational resources online.

‘The third quarter has been significantly weaker than we expected in US Higher Education Courseware,’ said chief executive John Fallon.

‘Whilst difficult in the short term this places more importance on our work to remake this part of Pearson and we are exploring new ways of deploying our new technology platform so that we can offer students highly affordable, convenient, adaptive, digital courseware,’ he added.

Despite the slump in sales, Pearson expects overall revenues to stabilise this year, driven by strong growth in other parts of the business.

Pearson’s stock closed 3% lower at £7.23 on Wednesday.

Carnival shares sink despite record third-quarter earnings

The cruise operator published a record set of third quarter earnings last week, but it wasn’t enough to stop the company having to slash its full-year profit guidance for the third time this year.

The company expects adjusted earnings of between $4.23 to $4.27, down from the $4.25 to $4.35 guidance range it offered earlier in the year.

Carnival blamed the profit downgrade on higher fuel prices and weaker consumer confidence caused by political and economic instability.

The tour operator’s stock has fallen more than 13% since it cut its guidance, with it closing 3% lower at £31.86 on Wednesday.

‘As a truly global cruise company, with nearly 50% of our guests sourced outside of the US, we are facing a number of current headwinds, including weakening economies affecting our Europe & Asia segment, a strong dollar and of course, the IMO 2020 regulations, and we are working to mitigate them,’ Carnival CEO Arnold Donald said.

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