Landsbanki, however, said that JS was expensive on fundamentals and that, should a deal with Delta Two not come off, “the downside would be substantial”.
Grocers also put summer gloom behind them with a sales rebound. TNS data showed that supermarkets notched up 5 per cent sales growth in the 12 weeks to October 7. Tesco led the pack at 6 per cent, while Asda and Sainsbury’s both gained market share. Tesco remained broker Bernstein’s top pick as the “best-positioned UK retailer in a more price-competitive environment”.
Credit Suisse rated WHSmith outperform following last week’s prelims. Although the broker believed that “more decisive news flow” would be needed to push the shares up in the short term, it welcomed delivery on promises so far. It noted: “There is little in this statement to suggest anything other than reinforcement of our positive view on WHSmith and its management.”
Analysts were divided ahead of Debenhams’ finals next week. Panmure Gordon, advising buy, said the retailer – which has recently traded at record lows – had been floated at a “smug valuation”, but argued: “There is a reasonable turnaround story here, although it’s not without risk, given its debt position.”
JP Morgan, however, said: “We think structural issues – particularly underinvested stores – are likely to overwhelm a more price-competitive stance.”
Embattled outdoor gear retailer Blacks issues interims next week. The retailer has been at the centre of speculative interest surrounding Sports Direct boss Mike Ashley’s intentions and shareholder Principle Capital has been agitating for big changes at Blacks, which at present lacks a permanent chief executive.
Reduce, advised Numis. It thought Blacks would have benefited from the poor summer, but warned: “With ongoing operational issues at Millets and dissenting shareholders, the outcome next week risks falling short of the already low forecasts.”
Last week’s announcement that Derek Lovelock would stand down as chairman of AIM-listed clothing retailer Jacques Vert and be replaced by Steve Bodger, also a director of private equity firm Alchemy, prompted speculation that a buy-out was on the cards. The retailer rejected the talk.
Also on AIM, investment vehicle Toscafield has bought an almost 7 per cent stake in kitchens group Smallbone. Numis has initiated coverage with a buy and said the retailer’s expansion programme should increase earnings per share by 94 per cent by 2009.
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