Home Retail Group and Game are likely to lose status next week when the FTSE index undergoes one of its regular recalculations.
Argos and Homebase owner Home Retail is expected to be ejected from the FTSE 100 and computer entertainment specialist Game is expected to fall out of the FTSE 250. Market debutant Ocado may win a place in the FTSE 250, however.
KBC Peel Hunt analyst John Stevenson said Home Retail’s likely exit from the blue-chip index reflected specific investor concerns, such as margin worries and the performance of Argos, as well as general sentiment towards retailers.
He said that Game’s expected demotion reflected the challenging market conditions that have led to poor like-for-like sales but that, ironically, the retailer may be past its lowest point.
Stevenson said that despite investor concern over retailers and likely share price falls in the short term, the sector is not on the edge of a precipice. “It won’t be Armageddon,” he said. “The biggest problem is uncertainty. Valuations are actually quite attractive for the right retailers.”
No comments yet