As the FTSE 100 took a hit on renewed fears of a double-dip recession, investor appetite for food retailers was keener than for general merchandise groups.

Sainsbury’s and Morrisons’ shares both rose. The pair performed strongest in the most recent Kantar grocery data and there was renewed gossip about potential Qatari bid interest in Sainsbury’s.

Market newcomer Ocado and top-dog Tesco were both down, however. Ocado’s value has plummeted since its IPO (see box, page 12). Meanwhile, Tesco chief executive in waiting Phil Clarke exercised an option and sold 217,825 shares for 398.88p each and Tim Mason, boss of the Fresh & Easy US business, sold 297,867 for 405p each.

Primark parent Associated British Foods (ABF) was in demand on speculation that the value fashion retailer could be spun off. Société Genéralé analysts value Primark at £4.1bn. Sources close to ABF said that there was no chance of the company, which is controlled by the Weston family, spinning off Primark.

Despite rising on the day that Robert Swannell was confirmed as chairman, Marks & Spencer’s stock was slightly down over the week. Analysts hope that the retailer’s relations with the City will improve when the former banker takes over from Sir Stuart Rose.

Flying Brands completed its acquisition of Garden Centre Online and expects to pay about £130,000 altogether for the etailer.

Flying Brands chief executive Stephen Cook said the deal would enable the business to leverage its customer base and increase online sales.

Halfords was up, despite newspaper stories about problems at its new distribution centre. Numis, advising add, assumes there will be an impact on second-quarter sales but maintained: “Recognising the clear rationale for the distribution centre move and of the view that March 2011 earnings guidance will not slip at its pre-close on October 7, we remain positive.”

Buy WHSmith recommended Oriel. The broker said the bookseller and stationer’s shares have been “friendless” because of

concerns such as the rise of e-readers and fears of tough trading to come. However, it argued: “The reality is that this company’s earnings per share growth will outstrip that of the market. We think that this offers a very attractive buying opportunity, especially as we believe a ‘special situation’ could ultimately emerge, with the demerger of the travel and the high street business.”

Among the analysts Kate Calvert, formerly with Shore Capital, has moved to Seymour Pierce, where she will work alongside Freddie George. She joins as the sector prepares for the autumn reporting season, kicked off by electricals group Dixons Retail next week.

Topics