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FTSE staggers as high street fortunes diverge

by Chris Marshall on Jan 08, 2014 at 09:06

FTSE staggers as high street fortunes diverge

The Christmas high street post-mortem continues, with Sainsbury (SBRY.L) and Mothercare (MTC.L) shares moving in the opposite direction after divergent financial updates from the pair.

Mothercare hit investors with a profit warning after the group suffered a 6.1% decline in Christmas sales. Prompting a 28% decline in Mothercare shares to 303p, the retailer blamed unseasonal weather and currency movements in some of its international markets, as well as the tough economic backdrop.

Mothercare remains ‘one of the toughest recovery stories in UK retail,’ said Liberum analyst Sanjay Vidyathi, who rates the shares as ‘sell’.

Sainsbury’s results were better received. The supermarket group capped a strong 2013 by reporting a 0.2% rise in sales in the 14 weeks to 4 January, slightly better than had been expected in the City.

‘Sainsbury’s outcome will be seen as a relatively good performance,’ summed up Cantor Fitzgerald analyst Mike Dennis. ‘Waitrose looks set to report the best Christmas sales’, he added though.

The UK biggest supermarket group, Tesco (TSCO.L), follows with numbers tomorrow.

Persimmon (PSN.L), the housebuilder, reported a 21% rise in full year revenues as momentum grows in the UK property market. Shares rose 3.2% to £13.27.

City analysts and journalists are chewing over the potential for a rival insurance company to take over RSA Insurance (RSA.L), the troubled insurance group which issued three profit warnings last year. Berenberg analyst Matthew Preston writes in a note today that there would be ‘theoretical merit’ in an approach from Aviva (AV.L), which would allow it to capture market leading positions in some markets, while enjoying a boost to cash flows. Such a hypothetical deal would ‘require a leap of faith’ from investors, Preston adds though.

RSA shares rose 1.7% to 99p

On currency markets the British pound rose slightly, up 0.09% to $1.6416, after Halifax reported that UK house prices rose 7.5% last year. Average prices did however dip 0.6% in December, the bank reported

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