Green shoots shrivelled as, for the third week running, general retailers were in reverse. The sector’s amazing rally over the past few months has shuddered to a halt as a result of profit taking by investors, some nasty shocks and a still uncertain outlook.
The ongoing reality of punishing high street conditions was made abundantly clear by greetings card group Clinton’s decision to put its loss-making Birthdays chain into administration. However, investors were pleased that the retailer had acted to stop the haemorrhaging and Clinton was the biggest riser of the week. Numis, advising add, said: “Birthdays’ administration effectively provides for an exit at nil cost, leaving Clinton Cards as a profitable entity.”
Confectioner Thorntons, which is a trading partner of Birthdays, reassured the City that the card chain’s collapse would not change its profit expectations.
Shareholders in cameras specialist Jessops are likely to see their investment wiped out, the retailer conceded. Jessops, which reported an interim loss of £5.9m, is in talks with lenders to find a “solvent solution” to its financial problems.
Mothercare’s shares rose as it delivered strong full-year results.
Kingfisher, which updates next Tuesday, fell after Morgan Stanley advised clients to take profits following the general retail rally. But UBS issued a buy note and thinks the flagship B&Q chain is likely to benefit from good weather and calendar effects. “Margin could also be better than expected as there are signs that industry pricing is moving up, while demand elasticity remains low,” it said.
Sell French Connection advised Altium following the retailer’s first-quarter update. Although like-for-likes rose 2 per cent at the core UK/Europe retail division the broker said the statement overall reflected that trading is tough in all of French Connection’s important markets.
Blacks Leisure revealed that it is in talks with Lloyds Banking Group “regarding provision of a financial structure that will enable the group to accelerate both the exit of the loss-making boardwear business and then development of the outdoor store portfolio”. Lloyds has extended its £35m facility to Blacks until August 31.
AIM-listed ethical fashion retailer Adili reported in its pre-close update that EBITDA would be “marginally” lower than expected although sales rose 56 per cent. The retailer is still seeking funds “that will be required by late 2009 for working capital to continue the company’s development towards cash break-even and profitability”.