Sir Terry Leahy’s cheer fails to rub off on brokers

“The recovery is happening,” declared Leahy, who said the international giant was well placed to profit as trading conditions improve. Brokers took their cue, sometimes reluctantly, from Leahy.

Oriel upgraded Tesco from sell to an “unappealing hold” and maintained: “We continue to believe that the share price action is going to occur elsewhere.”

ING reiterated its buy advice and said: “UK concerns have been overdone and we were reassured by the chief executive’s comments that Tesco UK is no longer underperforming the market with respect to market share.”

Sainsbury’s boss Justin King struck a more bearish tone than Leahy. The grocer reported a second-quarter like-for-like rise of 4.6% excluding petrol – a slowdown on the previous quarter. King expected market growth to slow because of reduced inflation, but was confident that Sainsbury’s focus on quality and value leaves it well positioned.

General retailers were down, in line with the market. Mothercare – which reports next week – bucked the trend and was the week’s biggest riser. Oriel upgraded Mothercare from buy to hold and said: “We believe Mothercare is using ever-decreasing amounts of capital to deliver robust, double-digit earnings growth.” The broker has a 700p price target.

Bill Adderley, founder of value homewares group Dunelm, is selling part of his shareholding, equating to an almost 8% stake in the business. He will not sell any more shares for at least 12 months and his son Will, chief executive, does not intend to sell any of his. Broker Singer, advising buy, said the share placing would increase liquidity.

Thorntons’ house broker Investec issued a buy note following the retailer’s first quarter update, showing a 2.3% rise in total sales and a like-for-like increase of 1.3% at company-owned stores. Investec said: “Notwithstanding some tough comparatives, all divisions delivered positive sales growth, with the exception of franchise, due to the administration of Birthdays.”

Speculation swirled that troubled sports retailer JJB is preparing a £50m rights issue. The store group was said to have canvassed the support of top investors and is thought likely to make an announcement in the next few weeks.

Upscale retailer Burberry amended its Japanese licence agreement. The expiry date was brought forward by five years and Burberry will receive higher royalty payments than previously planned. Chief executive Angela Ahrendts said the deal “will add to our profitability in the near term”.