Market Report: GUS leads retailers up on Experian sell-off hope

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The Independent Online

Despite almost constant gloom in the sector, mainly due to concerns over debt and weak high street spending, retailers are still managing to produce decent returns for investors.

After House of Fraser told the market it had received a preliminary bid approach on Friday from the private equity group Apax Partners, it was the turn of GUS to lead the sector higher yesterday. The broker UBS said it expects the company's consumer credit rating agency Experian to continue to grow and traders piled into the stock. GUS once owned Burberry outright, exiting the fashion brand through an initial public offering and gradual reduction of its stake. Many hope it will do the same with Experian, which according to most analysts would attract a far higher valuation on its own rather than as part of GUS.

The sector was also given a boost by stronger-than-expected numbers from Lowe's, the world's No 2 home retailer. Lowe's has emerged as a possible bidder for the struggling Kingfisher, and by confirming that its own house is in order speculators were betting that it would make a move on a European retailer sooner rather than later.

GUS was among the leading gainers in the FTSE 100, climbing 27p to close at 1,067p, an all-time high, while Kingfisher gained 1.5p to 233.75p. Although the bid talks between House of Fraser and Apax are at a very early stage, HoF's shares were 6.5p better at 124.5p. Analysts are divided over a possible bid price - Seymour Pierce reckons 160p is achievable while Numis Securities reiterated its "reduce" stance on the stock with a 110p target.

Elsewhere in the retail sector, shares in The Body Shop nudged 1.75p higher to 262.75p as the privately held natural cosmetics retailer Lush confirmed it was interested in bidding for the group.

Strong numbers from the property group Hammerson, up 54.5p to 1,156p, helped the rest of the sector, already buoyed by recent results from British Land. Hammerson reported net asset value of 1,237p per share, well ahead of consensus forecasts of 1,147p. British Land improved 30.5p to 1,231.5p; Land Securities gained 35p to 1,877p.

A strong day for the retail and property sectors was enough to send the wider market higher despite a poor day for oil, telecommunications and mining. The FTSE 100 edged 15.4 points higher to close at 5875.9.

Vodafone, which still makes up about 4.9 per cent of the FTSE 100, got hammered after announcing a £28bn goodwill write-off, mainly stemming from the acquisition of Mannesmann in 2000, but also from assets in Italy and Japan. Rumours surrounding the future of the chief executive Arun Sarin have been rife in recent weeks and investors, who have not exactly been thrilled with Vodafone's performance since he took over from Sir Christopher Gent in July 2003, are not likely to start giving him an easier ride now. Vodafone fell 3.25p to 113.5p. BT Group followed in its wake, giving up 2.25p to 208.5p.

Many traders have been left slightly baffled by the performance of shares in London Stock Exchange. The bid from Macquarie Bank ended as something of a damp squib but the Australians may come back, even though they now have to wait another six months to do so. That might be too late after weekend reports of a merger with the Chicago Board of Trade sent the stock to another all-time high of 855p, a rise of 22p. The LSE now has a valuation of more than £2.1bn, which is likely to be far too rich for Macquarie.

In the smaller stocks, the debt consolidation provider Accuma was well bid as many traders feel that full-year forecasts are too conservative. The company recently raised £4.75m in an institutional placing at 200p per share, and demand for the stock in light of concerns over high levels of personal debt sent the shares 12p higher to 279.5p.

There was a spectacular start to trading on AIM for Phynova, a developer of Chinese botanical drugs used to treat everything from obesity and cancer to respiratory tract defects. The shares opened at 77p via a private placement and traded strongly throughout the day, closing 72 per cent better at 132.5p.

The minnow Petards Group rose 0.12p to 1.12p after it announced a deal to supply missile warning equipment to the Royal Navy and Lynex aircraft used by the Army. The contract is worth an initial £2m, one-third of Petard's current market capitalisation.

Finally, there was grim news for shareholders in the outdoor media stock Maiden Group, as it revealed that all bids it has received since a strategic review in November are below the current market price. Analysts had pencilled in a bid valuing the company at about 100p per share but the interested parties had other ideas. The shares tanked on the news, closing 29p lower at 35.5p.

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