General retail stocks have outperformed the supermarkets lately, but that pattern was reversed this week as Tesco’s full-year results exceeded City expectations.
The UK’s biggest retailer impressed with adjusted pre-tax profits of £3.1bn, and its share price rose nearly 5 per cent on Tuesday following the results. Sales were up 13.5 per cent on a consistent basis to £59.4bn, although year-end net debt came in at £9.6bn – higher than the £8bn previously guided.
Rating the shares outperform, Bernstein analyst Chris Hogbin said the results “highlight the resilience of its core UK business and sustained growth in international markets”.
Carphone Warehouse confirmed plans a demerger of its Talk Talk fixed line business and Best Buy Europe, which includes its UK retail business. Its fourth-quarter trading statement showed connections up 12 per cent to 3 million. The company is to move its listing out of the general retailers’ sector into fixed-line telecoms in June.
Game Group revealed a huge jump in pre-exceptional pre-tax profits, which jumped by more than a third to £126m. Turnover was up by a third to just under £2bn but current trading is down 6.6 per cent like for like in the UK, which
the retailer said was against strong comparatives.
Recommending Buy, Pali analyst Nick Bubb said the like-for-like fall was not as bad as feared and thought the outlook for the retailer’s Christmas was positive. “With the good new software titles in the pipeline, the huge installed base of hardware and the loose market share from Woolies/Zavvi in the UK, Game are entitled to be confident,” he said.
Fashion group Alexon was the week’s biggest riser and revealed it had received and rejected an unsolicited bid approach from an unnamed suitor. The retailer revealed a £27.7m loss for the year to the end of January, which included exceptional items of £31m for onerous leases and impairment of goodwill.
Burberry revealed a strong second half, with sales up 21 per cent at constant exchange rates and retail sales up 36 per cent on the same basis. Full-year pre-tax profits are expected to be around the middle of the current range of market expectations.
Thorntons said it had benefited from the later timing of Easter this year. Third-quarter total sales climbed 11.7 per cent to £58.6m in the 14 weeks to April 18, with own-store like-for-likes up 3.3 per cent.