But as the days went by, excellent interims from JD Sports Fashion were overshadowed by more disappointing updates and the gloomy mood persisted.
Pali International advised investors to view rising share prices as a chance to sell DSGi, Home Retail and Next. The broker said: “It remains to be seen what impact last week’s amazing events will have on the real world but the consumer is likely to feel a bit worse off in terms of job cuts, weaker confidence and lower financial security.”
JD impressed analysts with a 54 per cent surge in pre-exceptional interim profits to£12.4 million on sales up 19 per cent to£299 million. Buy, urged Investec. The broker said JD’s results were “very strong, reflecting the success of its differentiated and well managed sports division in particular, where, despite pressure on footfall, conversion rates have improved”.
Bears circled Marks & Spencer ahead of next week’s second-quarter update. Deutsche Bank, which had been a long-standing buyer, switched its stance to hold and warned underperformance in food and general merchandise is likely to continue.
Carpetright organised an analysts’ visit to its new distribution centre and reiterated caution on the trading outlook. Brokers read the worst into the comments. Shore Capital, advising sell, said: “We cannot escape the fact that October and November are key trading months for the business. We believe the overriding macroeconomic pressures on consumers and households coupled with inevitable negative impact from recent volatility in financial markets is likely to dampen consumer confidence further.”
Fashion group Alexon managed to beat the City’s expectations, even though interim profits plunged from£8.7 million to£5.2 million and sales fell 5 per cent to£123.1 million. Dresdner Kleinwort downgraded the retailer from buy to hold and said that the business was in the sick bay but a rescue team in the form of new management was in place.
Laura Ashley celebrated a 13 per cent increase in first-half profits before exceptionals to£4.5 million on sales ahead 5.5 per cent to£120.2 million. However, the current trading update, covering the 33 weeks to September 13, showed an 11.6 per cent decline in UK like-for-likes.
AIM-Listed Jacques Vert suffered a 7 per cent like-for-like sales fall in the first 21 week of the financial year but said action had been taken to mitigate the effects of the downturn. House broker Seymour Pierce cut its full-year forecast “in light of a more difficult trading environment”.