Once again, the only way was up for store stocks as the general retailers’ rally maintained momentum following a raft of reassuring updates and results.
Food groups once again proved the laggards – with the exception of Sainsbury’s, which was buoyed by renewed speculation that Qatari investors might increase their stake or that the supermarket group might merge with Marks & Spencer.
Sainsbury’s emerged the winner from the latest TNS grocery data, which showed it had outshone rivals. Broker Bernstein suspected that Sainsbury’s performance reflected a bigger Easter impact for top-end food retailers, as shoppers treated themselves over the holiday. The broker also said that Tesco, which it rates outperform, offers the best value for investors on the back of international potential, “robust” UK growth prospects and its retailing services operations.
Numis raised its forecasts for Home Retail after Wednesday’s prelims but advised investors to sell the shares, along with those of Kingfisher. The broker said the retail sector’s rally was an opportunity to take profits.
Buy HMV, recommended KBC Peel Hunt following the entertainment group’s pre-close update. Although bookseller Waterstone’s suffered a 4.5 per cent comparable store sales decline, the eponymous chain was up 4.3 per cent. Chief executive Simon Fox said HMV’s profits for the year would be at the upper end of expectations, which ranged from £50.3m to £63.7m.
Value homewares group Dunelm posted a 2.3 per cent like-for-like advance in the 17 weeks since its half-year, bringing the 43-week decline to 2.5 per cent. Total sales rose 4.3 per cent over the 43 weeks. Citi retained its hold advice and said Dunelm has outperformed non-food trends this year. UBS upgraded its price target from 245p to 290p on the back of stronger than expected trading.
Sports group JJB won approval for its CVA. Executive chairman Sir David Jones said the development was “a major step” towards securing JJB’s long-term future.
Online fashion star Asos said profits would be slightly ahead of market expectations after celebrating a 104 per cent sales surge to £165m in the year to March 31.
In the four weeks to April 24 sales continued to rise and were up 80 per cent year on year. Seymour Pierce said the stock is expensive but stuck to its buy stance. The retailer still has the opportunity to introduce more brands,the broker noted, and has “great potential” overseas.
Electricals group DSGi was thought to be poised to launch a £300m fundraising as Retail Week went to press. The retailer was said to be preparing a rights issue and share placing.