Food trails behind rest of sector as reporting season concludes

Grocer Morrisons and bookseller and stationer WHSmith were the last big retailers to update. Although both performed well the two stocks were down over the week.

Panmure Gordon retained its sell stance on Morrisons. While recognising "an excellent set of sales numbers", the broker pointed out: "There is no change to [profit] guidance which, in an operationally geared industry, tells us that the growth was in part profitless."

KBC Peel Hunt rated WHSmith a hold. It is one of only two retailers in the broker's coverage universe to have delivered absolute share price gains last year. "While we expect the shares broadly to tread water, income characteristics provide clear reasons to hold the shares, with scope for further special dividends within the next two years," argued the broker.

Dresdner Kleinwort maintained a hold and said: "Once again, WHSmith has countered top-line pressure with better than expected gross margin gains and cost savings."

Tesco's promotion of Laurie McIlwee to group finance director, succeeding Andy Higginson, was welcomed by Blue Oar. The broker said: "This appointment seems to combine operational and financial skills and highlights the breadth of talent on the Tesco bench in the wider management team. The fact that it is an internal appointment will show there is no glass ceiling at Tesco and be good for morale."

Although Home Retail has bought Woolworths' Chad Valley toy brand, the defunct variety store group's Ladybird children's clothing label has yet to be sold. Singer thinks Mothercare is a potential buyer and said: "Mothercare could find this very popular brand attractive as a bolt-on acquisition, particularly given its existing franchise footprint in over 50 countries, which could provide enormous leverage for Ladybird."

Carpetright revealed that directors Lord Harris and his son Martin have granted security over 12.7 million of their shares. The statement was made in line with the FSA's general demand for such disclosures, following the controversy that embroiled Carphone Warehouse co-founder David Ross. Carpetright issues its third-quarter update on Tuesday.

Marks & Spencer's shares rose strongly over the week. Broker Citi issued a positive note on Tuesday, changing its recommendation from sell to hold. It did the same with DSGi, Home Retail, Next and Sports Direct. Citi upgraded Kesa and Kingfisher to buy. The changes partly resulted from an improving household cash flow outlook.