At the end of the year general retailers had sadly underperformed the All-share index, while food groups were also down but not by as much as the market.

Retailers challenged by the growing power of online players, such as entertainment groups Game and HMV, were among the worst performers over the year. However, etail grocer Ocado, which floated in 2011, was also a big disappointment to investors.

The worst stock overall was Blacks Leisure, whose future was soon to be decided as Retail Week went to press. The retailer’s assets were expected to be sold, but shareholders’ equity was worthless.

Sports Direct, which was one of those thought to be in the frame to buy Blacks, was one of the year’s best retail stocks. Grocer Morrisons’ shares outshone its food peers.

Bellwether fashion and home group Next was the strongest general retailer share price performer last year, but analysts expected the stock to come back following a trading update on Tuesday.

Next is on target to meet profit expectations for this year, but cautioned that there is only likely to be a small increase in earnings next year.

Peel Hunt, advising hold, observed: “As a likely outperformer, the Next statement does not set a positive tone for competitor updates.”

Shore Capital struck a similar tone and said Next’s “mellow” trading “shows the ongoing challenges facing the UK consumer, and this must have a potentially negative read-across for other apparel retailers on the high street – we think most obviously Marks & Spencer.”

Singer rated Next fair value and said its cautious guidance could lead to downgrades of about 3%. “This is likely to weigh on the premium-rated shares which have performed well recently,” said the broker.

Panmure Gordon resumed coverage of a variety of fashion and homewares retailers. The broker said its preferred stocks are “growth stories” Asos, Dunelm and Next. “These stocks are undervalued relative to the companies’ growth prospects,” the broker said.

M&S, N Brown and Ted Baker are all rated hold by Panmure. The broker said of M&S: “Whilst we see many positives in the M&S story, such as its exposure to a relatively wealthier customer, a stronger food offer and its multichannel model, we see better value elsewhere in the sector.”

Mothercare and Debenhams are both on Panmure’s sell list.

Among the big retailers updating next week are Morrisons on Monday, M&S on Wednesday and Tesco on Thursday.

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