Retail stocks were hit as the economy went into reverse, renewing fears of a double-dip recession, and Bank of England governor Mervyn King warned of plunging living standards.
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Big names such as Marks & Spencer and Next led the fall as investors fretted over how tough this year could be for retailers.
Broker Singer expects general retailers’ “real” like-for-likes to contract by about 2.5% this year, although that figure is likely to be lower among the biggest who are taking share from rivals.
JD Sports Fashion snapped up loss-making Irish counterpart Champion Sports for a nominal sum. The deal adds 22 stores to JD’s existing eight in the Republic of Ireland. Expansion is planned for both fascias.
FinnCap, which rates JD a buy, said: “It is a relatively small deal in a territory that will face challenges for some years. Nevertheless, management is confident that the acquisition will enhance earnings.”
Laura Ashley was the week’s winner as its value climbed by 15%. The fashion and homewares retailer said profits would beat expectations after a better-than-anticipated Christmas.
House broker Numis increased its target price to 22p and upped its profit forecast by £2.2m to £18m. Numis said the retailer is “too cheap given the clear momentum across the business.”
Seymour Pierce downgraded Asos to sell. The online fashion specialist has been at the centre of takeover speculation but mooted buyer Bestseller has ruled out a bid.
The broker said: “We are downgrading for valuation reasons and our concerns that consumers will migrate from aggregator to branded websites.”
UBS maintained its neutral stance on Anglo-French group Kesa, owner of Darty in France and Comet in the UK. The broker noted: Investor attention had been moving towards Darty but given Comet’s move into loss, questions over the long-term future of the business will resurface.”
Amid the gloom Ocado’s share price provided some light. The online grocer was up as bid speculation gathered pace. However, as the week went on Ocado’s stock, which has risen more than 20% this year, fell back as no hard news emerged.
Asda, Morrisons and Waitrose were all gossiped about as potential bidders but broker Arden said: “We suspect that the real answer is that an American stakebuilder is at work, although whether that is an institutional fund or a giant online company with tons of cash remains to be seen.”
Next week brings an update from Carpetright and Ocado’s full-year results.
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