Tragedy turned to farce at JJB Sports. The troubled retailer became embroiled in controversy when it emerged that executive chairman Sir David Jones had taken a loan from arch-rival Mike Ashley, founder of Sports Direct.
But investors were not laughing at the Carry On-style knockabout of claim and counter-claim. A quarter of JJB’s value was wiped out when the news broke. Jones has steered JJB off the road to ruin by successfully completing a company voluntary arrangement, but his Teflon reputation was badly tarnished. Separately, the retailer is considering its funding options.
Sports Direct issues finals next week. House broker Singer Capital Markets increased its target price from 65p to 85p and said: “A combination of self-help initiatives, strong value positioning and seasonal weather points towards improving performance in its core market.”
The Qatar Investment Authority’s stake in Sainsbury’s has been diluted as a result of the grocer’s share placing to fund expansion. The Qataris’ holding slipped below 27 per cent to 26.1 per cent.
ING stuck to its sell advice on Marks & Spencer despite the retailer’s better than expected first-quarter figures. The broker said: “It is not clear if this is the beginning of a fundamental and sustainable recovery. Management remains cautious regarding the outlook for the rest of the year and next year.” ING analyst Peter Brockwell suspected that weak comparatives, the timing of Easter and good weather had all helped Marks & Spencer.
UBS maintained its neutral stance on Marks & Spencer. The broker cautioned: “As with the wider sector there is a risk that stock prices will derate given that pressures on UK consumption may have only been temporarily deferred.”
Buy Kingfisher advised Execution ahead of an analysts’ trip next week to the DIY retailer’s stores in Russia. The broker said the visit would likely “showcase the opportunity the group has to grow share in an immature market”. Execution added: “Kingfisher is a global growth stock with a degree of self-help to safeguard profits, freehold property support and a sustainable, long-term business model.”
Citi reiterated its hold advice on Burberry ahead of the luxury specialist’s trading statement next Wednesday. Citi noted: “We view management’s confidence in achieving at least flat adjusted pre-tax profit in full-year 2010 as the worse case scenario, potentially leaving room for upgrades.”
The latest BRC retail sales data will be issued next week. Broker Pali expects a better performance than in May.