Retail stocks rallied as City analysts struck a positive note about trading ahead of Christmas.
Shares in Sainsbury’s rose 0.9 per cent or 2.7p to 274.5p after Barclays maintained its ‘overweight’ rating and raised the stock’s target price to 310p from 300p.
The bank said that the FTSE 100 company’s core grocery business was in ‘good health’.
The upbeat outlook came a day after Britain’s second biggest supermarket increased its annual profit forecast.
Looking ahead, Barclays added that the ‘possibility of Sainsbury’s making additional cash returns to shareholders has long been on the horizon, but the moment of decision appears to be arriving’.
Rally: Shares in Sainsbury’s rose 0.9 per cent or 2.7p to 274.5p after Barclays maintained its ‘overweight’ rating and raised the stock’s target price
In a further boost for the sector, Shore Capital’s Clive Black said that grocery, food and drink retailers appear resilient in the face of higher interest rates compared with big ticket consumer brands.
He said: ‘In the present 5.25 per cent base rate environment, we expect further resilience in demand for lower ticket items and affordable treats, and we believe that the forthcoming 2023 festive season in the UK will see strong food and booze demand, and selective gift purchasing, but gifting nonetheless, whilst for bigger ticket plays, the environment can be expected to be constrained.’
Among the blue-chip retailers, Ocado was up 6.5 per cent or 33p to 542.2p while Kingfisher added 3.5 per cent or 7.6p to 222.5p and JD Sports increased 3.9 per cent or 4.9p to 131.4p.
In London’s mid-cap index, Currys rose 3.9 per cent or 1.8p to 47.8p after the electrical goods retailer sold its business Kotsovolos, which trades in Greece and Cyprus, for £175m to Public Power Corporation. It was part of the group’s strategic review that aimed to simplify operations so it can focus on the UK & Ireland and the Nordics.
Liberum’s Adam Tomlinson and Wayne Brown said the sale is an ‘excellent outcome’, adding: ‘It would mean the group is effectively selling 7 per cent of total sales to bring in net proceeds amounting to around 30 per cent of the current market cap.’
There was a slight dip in third-quarter sales at Wickes as homeowners held back from splashing out on major renovation projects.
But with business picking up, the home improvement firm insisted its annual profits should meet market expectations.
Shares fell 0.8 per cent or 1p to 130.5p.
The FTSE 100 fell 0.4 per cent or 28.8 points to 7417.7 while the FTSE 250 added 1.2 per cent or 216.5 points to 17,983.8.
It was a strong end to the week for One Savings Bank (OSB) following target price upgrades from Berenberg and Barclays. It came a day after the specialist lender said it expects its loan book to grow by 9 per cent this year, up from its previous target of 7 per cent.
Shares increased 5.4 per cent or 18.2p to 353p – taking its gains for the week to 13pc.
And Smith & Nephew was rewarded for its improved outlook after JP Morgan raised the medical devices group’s rating to ‘overweight’ from ‘neutral’.
On Thursday the company upgraded its forecast for revenues this year to grow towards the higher end of its 6 to 7 per cent range.
Shares added 2 per cent or 19.6p to 981.6p.
Oil prices dipped more than 2 per cent as Brent crude fell below $85 a barrel.
It sent BP down 1.8 per cent or 8.6p to 489.9p while Shell dropped 4.2 per cent or 115.5p to 2,652.5p.
Michael Hewson, chief market analyst at CMC Markets, said: ‘Crude oil prices look set to close lower for the second week in a row as investors grow more confident that the tension in the Middle East will remain fairly contained’.