Store stocks were down across the board over the week but food and general merchandisers’ declines were limited versus the wider market, although that was ahead of a Mothercare profit warning.

All eyes were on the grocers as top dog Tesco and rival Sainsbury’s issued interims and a quarterly update respectively.

Buy Tesco, advised Shore Capital, despite slow going in the core UK market and costs at the retailer’s bank. Shore said that the UK performance was ahead of its expectations and noted: “We are especially pleased to see reference to ranging, service and store environment and we encourage management to be more judicious still in space plans.”

Bernstein welcomed “robust trading” at Sainsbury’s, which it rates ‘market perform’. The grocer’s valuation is “still not particularly compelling”, the broker maintained. Bernstein observed: “Sainsbury’s UK like-for-like performance is better than Tesco, but lags Morrisons. However, in terms of group sales growth Sainsbury’s still lags Tesco.”

Supergroup’s shares nosedived as Retail Week went to press, following a profit warning as a result of warehouse glitches that are likely to take up to £9m off the bottom line.

Arden stuck to its buy advice and reasoned: “If SuperGroup can convince the market that this is a one-off event and long-term growth plans are intact, then the shares will be very cheap after [the] huge mark-down and we are sticking to our buy on that basis.”

Singer also adopted a ‘buy on weakness’ stance and said the problem “should not have any lasting negative impact beyond Christmas, meaning next year’s numbers should remain intact”.

Dunelm remained on Peel Hunt’s buy list following a first-quarter update on Wednesday. The broker said: “Dunelm continues to represent one of the best organic roll-out opportunities in the sector, with significant upside from medium-term direct sourcing opportunities.”

Seymour Pierce rates Dunelm a hold and reasoned: “We are concerned about competition intensifying – both Next and Marks & Spencer are developing their home ranges in-store and on the internet – and the retail outlook.”

News that M&S has asked suppliers for a contribution towards its £600m store revamp programme unsettled investors, however. They feared it might be a sign that trading has been torrid.

Thorntons has “all to play for” this Christmas, said house broker Investec following an update. The broker said: “It remains too soon to gauge the success of initiatives within the group’s retail store base, which will be a key driver of investor sentiment. Trading performance over Christmas will give a first opportunity to evaluate this.”

After a turbulent week, the BRC monthly sales data to be issued on Tuesday will provide an opportunity to take the industry’s temperature.

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