As Retail Week went to press, Iceland founder Malcolm Walker had yet to meet Woolworths chairman Richard North about his potential bid for the stores division. Landsbanki was cautious on prospects for a deal because of pension and lease complications.
The broker, which has a reduce stance on Woolworths, said: “Given the disappointing first half and the reliance of the business on what is likely to be the most challenging Christmas trading period for some time, the risk to estimates remains on the downside.”
Blue Oar took a bearish view of Sainsbury’s showing in the latest TNS data and has the grocer on its sell list. The broker noted that it is losing market share and said: “This is a trend that we have been seeing since Christmas. The middle ground is not the place to be.”
Tesco disclosed four sale-and-leaseback deals on£605 million worth of property. Citi was interested that three of the four were straightforward sale and leasebacks rather than joint ventures.
The broker said: “Although this makes no difference to the amount of cash raised, a straight sale does mean that Tesco retains less control over the property and could suggest that it is less optimistic on future growth in value of those particular stores.”
Hold WHSmith, advised Shore Capital. The broker anticipates continued outperformance and observed: “While we continue to carry reservations about the lack of like-for-like sales growth for the high street division, profit and cash generation remains underpinned by margin enhancement and cost savings for the next two years. Furthermore, travel continues to deliver strong organic growth.”
ING advised investors to accumulate Kingfisher shares, despite cutting its price target by 35p, to 165p. The broker said: “Short-term stock price weakness should be viewed as a long-term buying opportunity. The fundamental investment case remains intact.”
Blacks Leisure strengthened its board with the appointments of former Hobbs chief executive Nick Samuel and Aspire Oil Services executive director Andrew Mallett. Kaupthing welcomed the appointments but, following a visit to Blacks’ Bluewater store, noted: “Trading has not been perfect in recent weeks, exacerbated by over-caution on the buying and subsequent availability shortcomings.”
Goldman Sachs has initiated coverage of N Brown and Sports Direct with a neutral stance and said: “We believe both companies will be adversely impacted by the macro-economic headwinds.”
The broker also instituted coverage of AIM-listed Asos with buy advice.