JJB fortunes improve but bleak conditions bear down on most

However, there was respite for hard-pressed JJB Sports. A share placing with tycoon Mike Ashley’s rival chain Sports Direct brought a much needed cash injection of£3.4 million.

Ashley has often taken strategic investments in rivals and analysts were sceptical that he would stage a full bid. Dresdner Kleinwort believed that JJB’s survival was assured, “one way or another”, but stuck to its sell advice.

Panmure Gordon rated Sports Direct a hold and said: “The investment tells us that our concerns over the size and structure of the company’s debt are probably misplaced, in the short run at least.”

Add Mothercare, tipped Numis following the second-quarter update. The broker said it was among the most resilient, underpinned by “terrific performances” from its international and direct arms. It added that childrenswear should be defensive in tough market conditions, and has a price target of 400p.

Investec reinstated coverage of Debenhams with a hold and commended the retailer’s management for “doing a good job in a bad market” and keeping business “on a steady course, despite the deteriorating environment and the stresses of a highly leveraged balance sheet”.
Merrill Lynch rated Debenhams underperform and said: “There is nothing that materially moves the needle to alleviate our debt concerns.”
Panmure Gordon analyst Graham Jones visited Primark last week and returned convinced that there are still plenty of growth opportunities. The retailer has the potential to open 70 stores in Spain, will debut soon in Holland and Germany and still has untapped potential in the UK. Jones noted: “Primark is far from at saturation in its biggest market and the obvious over-trading seen at the Oxford Street store does suggest that the West End of London is short of Primarks.”

Pali International upgraded Anglo-French electricals group Kesa from neutral to buy, arguing that “enough is enough” after its capitalisation slumped to£450 million. He said: “Darty in France has a freehold property portfolio still worth about£300 million and the group has nearly£50 million in cash, so the underlying group is being valued at just£100 million, or just 2 per cent of sales of approximately£5 billion.”
AIM-listed home shopping group Flying Brands said sales in the three months to September 26 totalled£7.5 million, down from£9.3 million in the comparative period but in line with reduced expectations.