The market was down last week as arguments continued to rage about the health of the economy and whether the right action is being taken to steer the world out of recession. However, once again the impact on store stocks was limited versus the All Share Index.

Sentiment was helped by better than hoped for ONS sales figures and stronger than expected findings from the CBI’s monthly survey, although retail job losses have been rising fast.

Among the most bullish of the brokers was Seymour Pierce, which advised investors to “get the party started” in retail stocks earlier this month and has gone so far as to use the controversial phrase “green shoots”.

The broker expects results in March and April to be better than feared and retailers to benefit from the timing of Easter, which is later than last year. Seymour Pierce favours “low-value defensives” such as Halfords and WHSmith and thinks DSGi looks good value after recent profit taking.

Broker Bernstein shrugged off concern that big grocers may take a hit during the downturn because of their non-food exposure and argued that they are likely to outperform. Bernstein said grocers’ non-food ranges are weighted towards less discretionary categories, such as health and beauty, and that food groups will be sustained by frequency of shopper visits and space growth.

JJB formally put its lifestyle division, comprising the Qube and Original Shoe chains, into administration last week. Singer Capital markets, which has a price target of 12.5p, said: “Filing for administration should leave them with a relatively small ongoing lease liability and the cash cost of taking this action is minimal when compared to the future losses.”

Pali International initiated coverage of computer entertainment group Game with a buy note and price target of 200p. The broker said Game is on a “miserly rating” and argued: “We remain bullish about the long-term outlook, given Game’s market leadership in the UK, its growing overseas presence, the strength of its highly profitable pre-owned game offer and the prospect of a near 30 million UK installed base of third-generation consoles in a year’s time.”

Add Thorntons, recommended Numis following last week’s results. The broker upgraded its forecasts “with cost saves coming through, Woolies out of the fray and a later Easter”.

There is little scheduled news from quoted companies next week, but all eyes are likely to be on DSGi on Tuesday, when a strategic update is expected.

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