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Ups and downs on the High Street

March 10th, 2009 by admin | Filed under Daily News, Recession, Retail, UK Small Business, UK employment.

British stores’ contrasting fortunes in the economic downturn are due to be revealed in the not too distant future when their annual statements are made public on the FTSE. ,.

Britain’s fourth-biggest grocer, Wm Morrison Supermarkets), is expected to announce a 2.5 percent rise in their full-year profit on Thursday. Estimates are that the group will report a pre- tax profit and one-off items of 627 million pounds for the year ended January compared with £612 million the year before.

Greggs, the budget bakery chain are expected to announce that some of the icing has fallen off their cake with a modest decline in their 2008 profits. Despite the estimates that Greggs will report a ten percent fall in 2008 profit before tax, their share values grew by 1.4 percent (51 pence to 3,651) on recommendations of a dividend increase to 100 pence.

John Lewis, whose empire includes department stores as well as the up market Waitrose grocery chain are also expected to announce a drop in profits.

Home Retail, who own the Argos general store chain as well as the Home base do-it-yourself outlets are expected to announce a fall in sales and profits. Trends in retailing continue to show that while food sales remain slightly below the levels of 2008, non food retailing seems to be much harder hit. Proof of the pudding is in the Morrison stores group relatively healthy showing. Morrisons , who operate 380 stores throughout the UK , which serving around ten million shoppers a week, are more than holding their own as result of their strategy on selling essential items at prices that beat most of their rivals.

Shares of sporting goods retailer Sports Direct International are one of the major success stories in the FTSE having gained 51.2% within the last six months. Another high-flier is Persimmon PLC the household goods group up 45.7% for the same period, Doing not quite so well, but still with very little to complain about is Thomas Cook Group PLC the travel and leisure company whose shares show a gain of slightly more than twenty percent over the last two periods.

Taking up the rear are WH Smith PLC, always prepared to show what it is to do badly on the High Street, and seeing their shares drop by 8% this year alone

Off the retail scene, the star of the day on the FTSE was undoubtedly the British international dealer and broker Tullet Prebon Plc whose shares rallied by 18 percent on the day’s trading (24.75 pence, to 161) The company’s full-year net income rose by 29 percent, largely due to increasing price fluctuations on currency and energy markets.

On Monday trading the FTSE 250 index rose by 1.72% or 99.135 points to 5863.92 while the FTSE 100 finished the session also up a modest 1.47 per cent, or 52.24 points at 3,594.64

Sterling continued to fall against the dollar and the Euro whilst consolidating its position against the Japanese Yen and the Swiss Franc:

Pound/US dollar 1.3858

Pound/Euro 1.0841

Pound/Japanese Yen 136.04

Pound/Swiss Franc 1.5907

Even news of the agreed $41bn takeover by Merck of their New Jersey based competitor, Schnering- Plough failed to produce too many ripples in the markets, even though it was the second major deal in the global pharmaceuticals industry to be stuck within six weeks. The takeover, creating one of the world’s biggest drug manufacturing concerns with combined sales of nearly $50bn, is to be done via a complex reverse takeover in which the much smaller Schering-Plough will technically acquire Merck.

Gloom surrounding the banking sector and the broader economic outlook continued to dominate trading with the Dow Jones Average dropping 79.89 to close at 6547.05. Nasdaq fell 25.21 points to 1268.64

In Asia, Japanese stocks dropped to their lowest levels for more than a quarter of a century on Monday.
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