City worries mount over Christmas at Woolworths

Woolworths has been singled out as one of the most vulnerable listed retailers in the run-up to a Christmas on the high street that could be the worst since the 1970s.

Philip Dorgan, an analyst at Panmure Gordon, said continuing weak product availability in stores did not bode well for its critical festival trading period.

Related articles

• House approves $700bn rescue plan
• Will bail-out mean the crisis is over?
• Dominic Lawson: Democrat fingerprints are all over the financial crisis
• Simone Wallmeyer: We unmask the face behind the crash
• EU 'Big Four' in bailout row
• Bailout? Over to you, Gordon
• Mary Dejevsky: Amid the chaos, we should hail the triumph of Europe
• UBS to axe 2,000 jobs
• Number of new homes being built plunges to 50-year low
• Growing number of firms at risk of going bust, warns Bank
• Wall Street endures further turbulence amid bleak news
• Cash-strapped Bolton faces uncertain times
• US bailout likely as IMF warns of full-blown crisis
• Moment of truth for default derivatives
• Flood of customers forces Rock to stop saving accounts
• M&S reveals plummeting food sales
• Bellwether Wolfson warns of slowdown
• Ted Baker warns over 'increased economic uncertainty'
• Jeremy Warner's Outlook: Brown needs to be more bold in dealing with banking crisis
• Terence Blacker: Sound and fury in the wake of this financial crisis
• Credit crisis diary: I predict a riot (credit-crunch style)
• Search the news archive for more stories

Mr Dorgan said: "We believe that the current retail environment is the worst for more than 30 years, and we see it as a no-brainer that a retailer which seems to be struggling to get stock ahead of its most important trading period represents a risky investment."

He added that Woolworths is trying to improve availability by clearing stock, but is not being helped by the scaling-back of the insurance cover that credit insurers give to some suppliers to trade with the retailer. Yesterday, Panmure Gordon reduced its target price on Woolworths' shares from 4p to 3p.

Many suppliers to small and medium-sized UK retailers have had their credit insurance cover trimmed over the past year, but industry experts believe Steve Johnson, who took the helm last month, faces a substantial challenge to turn Woolworths around.

In the interim results statement last month, Woolworths' auditors said: "These disclosures indicate the existence of material uncertainties which may cast significant doubt about the company's ability to continue as a going concern."

In August, Woolworths – which also owns Entertainment UK, a music wholesaler, and 2 Entertain, a joint venture with the BBC – rejected a bid for the group's retail chain by a consortium led by Malcolm Walker, the chief executive of the frozen food specialist Iceland.