A downbeat assessment of retail conditions from the CBI on Tuesday unsettled investors but just a day later fashion bellwether Next posted a better than expected first quarter, helped by warm weather.
Although Next continued to sound a cautious note on prospects, reasons to be cheerful included the likelihood of inflationary pressure on the consumer easing later this year.
Hold, advised Peel Hunt, which also thought the update could presage better news generally. The broker said: “After a weak first quarter, we expect the general retail sector to continue to outperform over April, with sales figures from the BRC and further trading statements likely to underpin a more stable and positive sentiment towards the sector.”
Singer, which rates Next fair value, said: “This is an excellent outcome, and the shares should edge up, but investors should not confuse this with a sign that the consumer environment has changed.”
Blacks Leisure cut its full-year losses and appointed former Tesco and Figleaves director Julia Reynolds as chief executive. However, Seymour Pierce switched its stance from buy to hold. The shift reflected current trading below expectations and debt concern. The broker cautioned: “A fundraising over the next 12 months is a probability.”
Kesa was up in the week that Hugh Harvey, managing director of the Anglo-French group’s embattled Comet chain, stood down. Kesa updates next week and broker Arden observed: “The likely terrible trading at Comet called for human sacrifice.”
Following release of Kantar and Nielsen grocery market data Shore capital observed: “Of the big four, convergence is the name of the day with less than 2% implied sales growth separating the major players.” Bernstein also noted the convergence and said: “We see exposure to alternative growth channels – for example international and retailing services – as increasingly important drivers of the relative performance of the UK companies in our coverage.”
Game was the week’s biggest riser but Numis rates it reduce after last week’s prelims, which showed strategic progress but soft current trading. The broker said: “Trading on 6.8 times earnings, the unabating structural pressures would see us continue to avoid the shares, despite the enticing valuation.”
Marks & Spencer said that Laura Wade-Gery will join from Tesco as multichannel ecommerce boss on July 4. The retailer’s shares were flat over the week.
JJB Sports bade farewell to the main market. As part of its retrenchment and turnaround, the retailer switched its listing to AIM.
Big retailers updating next week include N Brown, Sainsbury’s and SuperGroup.
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