The meteoric rise of the stores sector tailed away over the week and general retailers underperformed their food peers and the market.
The latest BRC sales data showed 1.8% like-for-like growth in July but brokers sounded a note of caution. Seymour Pierce said: “Over the next few months retail sales will be up against easy comparatives and we believe the significant number of companies reporting in the next six weeks will report better than expected figures. We remain, however, concerned about the 2010 outlook – in particular rising unemployment levels.”
Sports Direct’s controversial acquisition of 31 shops from rival JJB was referred by the OFT to the Competition Commission after the failure to offload five stores because of competition concerns. Sports Direct’s house broker Singer said: “There is the possibility of more drastic action with implications for all 31 stores. It remains to be seen whether or not the leases might have to revert back to JJB Sports.”
Meanwhile, the increasingly tedious rows embroiling JJB continued as former chief executive Chris Ronnie weighed in with allegations against executive chairman Sir David Jones.
Retailers’ refinancing initiatives continued apace. Home shopping group Findel successfully completed a share placing and open offer, raising £81m and putting it on a better financial footing. Chocolatier Thorntons agreed a new revolving credit facility of £52.5m, which runs until August 2012. And Blacks Leisure confirmed that its new working capital facility was formally in place.
Broker Numis dismissed speculation that online star Asos had been suffering problems at its warehouse. Numis stuck to its buy advice and said: “Having spoken to management, there seems to be no substance to this.”
KBC Peel Hunt spoke to new Asos finance director Nick Beighton. Recommending hold, the broker said: “Clearly drawing on his time at Matalan, Nick sees a number of opportunities to improve operating leverage given that Asos had been focused entirely on delivering 100%-plus sales growth over the past few years.”
Among the brokers, Collins Stewart has strengthened its equities team with the appointment of former Blue Oar stores man Greg Lawless as pan-European retail analyst. Previously Lawless has also worked for retailers including Safeway and Marks & Spencer.