Market Report: Next best thing as fashion grows for clothes retailers

 

Optimism that conditions might be easing for clothing retailers persuaded investors to stock up on Next yesterday, despite claims the level of service on the high street is waning.

Lord Wolfson's chain may have warned last month that sales and profits growth this year would be modest, but Deutsche Bank believes that 2012 could be "materially better" for the sector than the previous 12 months.

Pointing out that retailers were forced to hike prices last year thanks to a jump in the cost of making clothes, the broker's scribblers argued that this inflation pressure should ease, not least because of a recent sharp fall in the price of cotton.

They also said they believed the number of new stores opening in the UK would be smaller than ever, claiming they "expect less net space to be added in 2012 than in any other year on our records".

The analysts were most keen on the mid-market retailers, pointing out that the value chains' customers tended to be from demographics more affected by rising unemployment and inflation.

In response, Next ticked up 14p to 2,733p, although its move was tempered somewhat by Oriel Securities. It was rather less confident on the high street, saying that with weak sales growth forcing shops "to batten down the hatches" and cut staffing costs, "falling service levels have damaged retailers' ability to drive sales".

As a result, Oriel's analysts warned that "margins may drop as this balance is redressed", while adding that the recent relief bounce following a particularly tough Christmas "means the risk of disappointment is rising". They removed Next's "buy" rating while also downgrading their advice on Debenhams (down 0.5p to 69.5p) to "add".

A late slide meant the FTSE 100 finally moved out of the tight range it had been trading in all week, closing 43.08 points worse off at 5,852.39.

While investors were used to uncertainty in Greece, it was the news from the US which caused the greatest damage as disappointing consumer confidence figures knocked the market back.

The miners were hit hard by Chinese data showing imports dropping the most since 2009. Kazakh digger Kazakhmys dipped 53p to 1,124p while Anglo American was 113.5p worse off at 2,746.5p in the wake of mixed results from its De Beers diamond business.

Having been helped up by the revival of vague bid speculation earlier in the week, Shire continued its strong recent performance by ticking up 34p to 2,214p. The drugs maker, which released its full-year figures on Thursday, was boosted by Credit Suisse's claim that the Bank of England's £50bn cash injection would devalue sterling and therefore benefit most those companies with a high exposure to the US.

As well as Shire, the Swiss broker also highlighted National Grid. However, the utility was knocked back 7.5p to 6325p after JPMorgan cut its advice to "neutral" thanks to regulatory uncertainty.

Four weeks after the Costa Concordia tragedy, Investec's analysts decided to take a first look at the ship's owner, Carnival. Giving the cruise giant a "buy" recommendation, they said the accident would not put holidaymakers off cruises, although this did not stop the group creeping down 15p to 1,962p.

Down on the FTSE 250, Kenmare Resources continued its recent march higher, powering up 1.6p to 53.1p. Vague rumours were continuing to do the rounds that it could be a takeover target, while the Irish miner has now made more than 7 per cent over the last three sessions.

The insurer Phoenix avoided being one of the worst losers despite announcing that bid talks with CVC Capital Partners – which started in November – had fallen apart, as it fell just 8.5p to 561p.

Hopes that it could treble its earnings per share in four years meant that Imagination Technologies advanced 14.5p to 630.5p. Goldman Sachs made the prediction, citing the chip designer's opportunity in both the tablet and smartphone markets, while the broker also chose the company as one of its favourites in the technology sector.

Blue-chip rival Arm Holdings was also strong, climbing 6p to 567.75p, despite announcing that its director John Cornish had sold more than £1m-worth of shares just a day after getting the vast majority of them through a bonus and incentive plan.

While bid speculation was still swirling around Kurdistan-focused Gulf Keystone Petroleum, there were also vague rumours doing the rounds that the punters' favourite could soon unveil a decent oil find.

With it also being helped by the French giant Total saying it was examining "very closely" the possibility of investing in the autonomous Iraqi region, the explorer spurted up 40.25 to 382.75p, continuing a run in which its share price has doubled in little more than a month.

FTSE 100 Risers

Tate & Lyle 685p (up 12.5p, 1.86 per cent)

Having suffered a sharp drop on Thursday following its third-quarter update, the Splenda-maker manages to regain some of its losses after topping the blue-chip index.

InterContinental 1,397p (up 18p, 1.31 per cent)

Hotels group gets a boost from both Credit Suisse and Panmure Gordon raising their target prices ahead of its final results, which are set to be released next Tuesday.

FTSE 100 Fallers

Evraz 412p (down 16.8p, 3.92 per cent)

Roman Abramovich-backed steelmaker suffers a large slump once again, meaning it has now lost more than 10 per cent during a five-day losing streak.

ICAP 366.6p (down 14.8p, 3.88 per cent)

Interdealer broker is knocked back by Goldman Sachs' decision to cut its rating to "neutral", saying it prefers UK asset managers to market structure companies.

FTSE 250 Risers

Homeserve 251.8p (up 6.5p, 2.65 per cent)

Home repairs company stretches its recent rally to a second day, having dropped more than 17 per cent over the previous three trading sessions.

WS Atkins 749p (up 16.5p, 2.25 per cent)

Engineering firm given a boost by analysts from both Credit Suisse and Espirito Santo raising their target prices in the wake of its recent interim management statement.

FTSE 250 Fallers

Cable and Wireless Communications 36.33p (down 7.24p, 16.62 per cent)

Telecoms firm slumps after warning that its Panama business is not performing as expected, thanks partly to a jump in competition.

Ferrexpo 334p (down 19.7p, 5.57 per cent)

Ukranian iron ore producer retreats in the wake of the decision of Renaissance's analysts to downgrade their recommendation to "hold" from "buy".

Suggested Topics
Arts and Entertainment
TVShow's twee, safe facade smashed by ice cream melting scandal
News
newsVideo for No campaign was meant to get women voting
News
A photo of Charles Belk being detained by police on Friday 22 August
news
News
news
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Sport
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
Arts and Entertainment
Amis: 'The racial situation in the US is as bad as it’s been since the Civil War'
booksAuthor says he might come back across Atlantic after all
Extras
indybest
Life and Style
Google Doodle celebrates the 200th birthday of Irish writer Sheridan Le Fanu
tech
Arts and Entertainment
Vinyl demand: a factory making the old-style discs
musicManufacturers are struggling to keep up with the resurgence in vinyl
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

C# Developer (C#, ASP.NET Developer, SQL, MVC, WPF, Real-Time F

£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...

C# Swift Payment Developer (C#, ASP.NET, .NET, MVC, Authorize.N

£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...

DevOps Engineer - Linux, Shell, Bash, Solaris, UNIX, Salt-Stack

Negotiable: Harrington Starr: A fast growing Financial Services organisation b...

Trade Desk FIX Analyst - (FIX, SQL, Equities, Support)

£50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...

Day In a Page

Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
Manufacturers are struggling to keep up with the resurgence in vinyl records

Hard pressed: Resurgence in vinyl records

As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

A tale of two writers

Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
Could a later start to the school day be the most useful educational reform of all?

Should pupils get a lie in?

Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
Prepare for Jewish jokes – as Jewish comedians get their own festival

Prepare for Jewish jokes...

... as Jewish comedians get their own festival
SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

A dream come true for SJ Watson

Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
10 best cycling bags for commuters

10 best cycling bags for commuters

Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

Paul Scholes column

Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?