The bank’s chief UK economist advised shorts to close their positions in retail, while one of its analysts gave electricals group DSGi a lift by speculating that it may still be a Best Buy bid target.
However, Pali International analyst Nick Bubb was sceptical. He said: “We would keep on selling after Friday’s dead cat bounce and we have our 53p target under review.”
The City was pleased by better-than-expected first-quarter results from international DIY group Kingfisher. Panmure Gordon believed Kingfisher’s glass to be half-full and said: “There is much to support the shares in this statement.” Numis welcomed a gross-margin gain but advised reduce, partly based on fears that Kingfisher is “exposed to earnings per share erosion”.
Seymour Pierce moved Home Retail, owner of chains Argos and Homebase, from hold to buy, despite bringing down profit forecasts and the retailer’s likely exit from the FTSE 100.
Analyst Freddie George said: “Argos sells a broad mix of categories and is able to exploit new growth opportunities, which should help to contain the vagaries of a more difficult trading environment. In addition, management has a very strong track record in managing sales, mix and margins.”
Shore Capital analyst John Stevenson was impressed on a visit to Debenhams’ new Liverpool One store. He said: “Overall, the store and management came across extremely well, clearly focused on driving transaction values.” Advising hold, he observed: “While we believe the consumer downturn has yet to reach its nadir, we believe Debenhams’ efforts to improve its retail standing are manifested strongly at store level.”
Investec’s David Jeary was also out and about, visiting HMV’s overhauled store at High Wycombe. He liked the changes, noting: “It added fuel to our change of heart on the stock, with HMV’s revised space allocation and shop-fit set to benefit from product trends and weakening competition on the high street, despite ongoing structural issues.”
Jessops’ agreement of new finance facilities pleased house broker ABN Amro. It said: “Funding visibility allows the group to trial three new store formats, signalling that its focus is beginning to move forward from the survival mode of the past year.”
Next week, updates and results are expected from Tesco, Home Retail and Carphone Warehouse. Tuesday’s BRC sales data will give an overall snapshot of how the high street is faring.
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