The stores index climbed 7 per cent in just one day, on what Pali International analyst Nick Bubb described as Super Tuesday. Hopes of interest rate cuts and rumoured takeover bids pushed the market forward, despite surveys showing that consumer confidence was continuing to fall.
As Retail Week went to press on Wednesday lunchtime, Marks & Spencer shares were up 2.5 per cent amid rumours of stakebuilding by the world’s second biggest retailer Carrefour. M&S refused to confirm or deny suggestions that the French grocery giant had taken a 5 per cent stake in it.
The market’s rally came despite more signs of how challenging life has become for big-ticket retailers. Carpetright issued an appalling first quarter trading update, with group sales down 9.2 per cent and like-for-likes in the UK and Ireland down 15.4 per cent.
Numis upgraded its stance from reduce to hold following a 14 per cent fall in the share price over the month, but warned that “positioned to bear the brunt of the consumer and housing downturns, sentiment and forecast risk will continue to haunt the stock for now”.
Debenhams was the week’s second biggest riser, on the back of further stakebuilding by Baugur-backed vehicle Milestone Resources. Hopes rose that this might presage a bid by the Icelandic investor, but this is thought to be unlikely in the present climate, given the difficulty of securing debt.
Electricals giant DSGi was another big riser, despite reports that US rival Best Buy plans to open as many as 200 stores in the UK. Investec analyst David Jeary reiterated his sell recommendation. “The combination of very high operational gearing and declining consumer confidence highlights the potential for further downside forecast risk,” he said.
Kaupthing upgraded Topps Tiles from sell to fair value. The company reported like-for-like sales down 7.7 per cent in the 17 weeks to July 26, but the broker said it was doing the right things to avoid a costly refinancing.
Blue Oar Securities visited Sainsbury’s new flagship at Sydenham and was impressed. “For the first time, the company has added large-format non-food skills to its armoury,” it said. But it retained a sell rating, saying the grocer lacks scale in hypermarkets.
There was rare action at department store tiddler Beales, which was the week’s biggest riser after the board advised shareholders to reject property investor Andrew Perloff’s tender offer for 28 per cent of the company’s shares.
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