Mothercare gave its shareholders something to smile about as it emerged as the top performing general retail stock of 2003.
Mothercare's share price rose by 240 per cent over the year, closing at 326p on December 31.
Three-quarters of general retailers outperformed the All Share average.
The FTSE General Retail Index increased by 23.4 per cent overall, while the All Share Index grew by 16.6 per cent. Marks & Spencer was among the 10 fallers - down 8 per cent - but JD Group fared worst, with a decline of 29 per cent.
Despite the sector's strong performance overall, analysts were not optimistic about the coming year. Evolution Beeson Gregory retail analyst Nick Bubb said falling pricing power and the tougher outlook could lead to reduced takeover activity this year. 'Things will only get worse in 2004, following the tough fourth quarter we've just been through,' he said.
Shore Capital analyst John Stevenson said the underlying trend towards leisure, rather than retail spending, looks likely to continue.
He said that recent trading had been 'from dull to alright', but believed average like-for-like sales for 2004 would struggle to rise above 2 per cent and that the sector was unlikely to continue its strong run.
He said stocks to watch in 2004 include specialists such as HMV, Blacks and Topps, but investors should 'choose their clothing retailers carefully'.
Bubb said Dixons, Matalan and Ottakar's could provide some 'bright spots'.
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