However, the shares of Carphone itself were not among the beneficiaries as they slid over the week. Some observers questioned the chances of the venture’s success and others were disappointed that there had not been a full bid for Carphone.
DSGi’s stock soared on speculation that it might become a Carphone/Best Buy bid target and what sounded like the eccentric idea that Kingfisher might attempt to buy it, reverting to its original incarnation as a retail conglomerate. Kingfisher meanwhile was up on talk that it was a private equity acquisition target.
Food shares had a dull week compared with the general merchandisers. Sainsbury’s full-year profit surge failed to impress Panmure Gordon. The broker disputed the rosy view conveyed in the results and concluded: “Profits are still lower than those achieved in 1991, operating cashflow growth has been weak and the industry environment is about to get a lot tougher. We remain sellers on valuation grounds.”
Panmure was pleased, though, by Tesco’s£958 million acquisition of 36 stores in South Korea and said: “The deal takes Tesco close to being number one in a market which is their highest returning overseas.”
Signet reported a 2.5 per cent fall in like-for-likes in the first quarter. Although comparable stores sales in the UK rose 5.3 per cent, the US – where Signet does the bulk of its business – fell 4.7 per cent.
Hold, advises Investec, which said Signet’s premium to the sector looked difficult to justify, but increased its target price from 60p to 70p because of the retail sector’s rally in the past fortnight.
Sofa specialist ScS Upholstery piled on the woe with another profit warning. Its like-for-like sales orders were down 14 per cent in the eight weeks to May 10. Bank-holiday performance was particularly bad. Dresdner Kleinwort said: “If ScS survives this downturn, the shares could be worth a lot more. But there is little visibility on this short term.”
There was no further progress on Baugur’s bid for Moss Bros as Retail Week went to press, but Laura Ashley investment vehicle Bagleys now holds a 7.45 per cent stake in the menswear retailer, prompting talk of a potential counter bid.