Goldman Sachs has forecast that retail like-for-likes will rise in 2010 after two years of declines in the store groups it follows.
The broker expects comparable store sales to advance 0.6% this year as consumers’ disposable income remains high, but conceded that the trading environment will remain tough for many.
“We believe that current share prices imply a 20% reduction in operating profits in 2010,” said Goldman analysts. “This would require an average sales reduction of 6%.” The broker believes that is too cautious a view and “current share prices offer selective valuation opportunities”.
Goldman Sachs said it prefers retailers with self-help opportunities, such as those with the opportunity to improve margins and returns. The broker reiterated its buy advice on Debenhams, HMV and Signet and added Marks & Spencer to its “conviction buy” list.