A year ago electricals retailers and department stores were riding the crest of the World Cup wave but now store groups that benefited then are coming up against tough comparatives.
Among the football tournament’s commercial winners was Dixons, which on Wednesday unveiled a £59m sale and leaseback of a distribution centre in Sweden.
The retailer, which has found life tougher since the World Cup and earlier this year issued a profits warning, will use the money raised for “general corporate purposes” including bond repayments.
Broker Seymour Pierce, which rates Dixons hold, said the deal would be welcomed by investors but cautioned: “The management are battling against a market with continued weak demand.”
Arden, recommending sell, fears the first quarter statement will be “sobering” and that Argos “has had a very tough time, particularly in furniture and electricals”. Argos’s like-for-likes could be down as much as 6% despite weak comps, the broker said.
Signet remains on Investec’s buy list following a “stellar” first quarter, powered by the jeweller’s US business. Investec raised its full-year profit forecast by 16% and said: “It is clear that the group would open more space were it available, but US property developers have yet to stock up the pipeline with a strong flow of properties to match Signet’s exacting standards.”
Top supermarket Tesco published its annual report, detailing changes to controversial aspects of directors’ rewards and addressing themes including product and brand development.
MF Global, advising buy, said: “We believe Tesco has identified hundreds of sites in the UK where it can provide a more affluent community with a higher-quality - higher-priced - food and non-food range.
Broker Singer stuck to its buy stance on Mothercare following the retailer’s results a fortnight ago. Singer said: “Our earnings per share forecasts are broadly unchanged as cost savings and tax offset lower margin assumptions.
“Management needs to deliver a better gross margin result though, and therefore upgrades, if an Early Learning Centre goodwill write-off is to be avoided.”