Stores, particularly food retailers, underperformed a market convulsed by uncertainty as big issues such as the future of the euro and the outcome of the general election dominated headlines.
BRC data for April showed a 2.3% like-for-like decline across the stores sector but that partly reflected the timing of Easter. Broker Numis said that performance was more upbeat than it appeared and observed: “We were positively surprised by the strength of the non-food like-for-like, which turned positive on a two-year view for April, and for an Easter-adjusted average of March and April.”
Citi, which has an underweight stance on retail, said it was telling that “big-ticket, discretionary products still showed meaningful declines, with electricals and furniture among the weakest categories”.
Kesa, the Anglo-French electricals group, reported that like-for-like sales at its Comet chain fell 4% in the 16 weeks to April 30 and 1.4% in the year to that date. At group level, the falls were 1.2% and 1.5% respectively.
Ambrian, advising hold, said the fact that French chain Darty is unlikely to grow this year “will allow the UK market’s obsession with Comet to run its usual course and is likely to lead to a dull share price performance”.
Accumulate Next, advised Charles Stanley after last week’s update. The broker said: “The trading environment is likely to remain tough in the near to medium term but we believe future growth prospects are good.
“Action is being taken to improve the fashion content of ranges, to develop the Lipsy franchise, further expand in homewares and grow international.”
UBS downgraded Asos to neutral from buy, which followed last week’s initiation of coverage of the etailer by Oriel with a sell note. UBS said Asos’s valuation fairly reflected its high growth profile. Oriel said it was not seeking to pick holes in Asos’s quality, but added: “It is at a crucial crossroads, with management exploring the possibility of morphing the business model while looking to drive growth through marketing and delivery and returns incentives.”
Sales surged 40% at famous department store Liberty in the first four months of the year. Revenues reached £26m and discussions about a £32m sale of the landmark store to private equity firm BlueGem are ongoing.