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Retailers in the spotlight on another volatile morning

There was an initial rise in the FTSE 100 index this morning but overall sentiment was mixed with plenty of action in the retail sector. An early leader was Next after it beat H1 profit forecasts although it added that trading is currently tough. Like-for-like sales at its shops fell 3.6% overall and were down a further 4.8% in the six weeks to 8th September.

French Connection warned that turnover in H2 will be lower than last year in challenging trading conditions, and aside from its core ladies ranges, sales are softer than last year. JJB Sports also warned that H1 profits were below expectations as it struggled to overcome the absence of a major international football event to drive sales and it shares were down a hefty 12% mid-morning.

Financials performed rather better than recently, with Barclays strong after Bob Diamond, the president, conceded that the rival offer for ABN Amro from the consortium led by Royal Bank of Scotland would probably win, thus increasing focus on Barclays as a potential takeover target itself. Elsewhere, Redrow saw profits flat for the year to June at £120.5m on revenues 3% higher at £796m, both in line with market forecasts. Premier Farnell overcame difficult market conditions in the US to post improved profits, with sales over the web hitting a record in Q2.

Mike Estrey
Head of Research at Blue Index, the experts in Day Trading
11/10/07

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