Marks & Spencer’s share price shrugged off controversy over Sir Stuart Rose’s shift into the role of executive chairman in June. Although down, the retailer’s share price performed better than the general retail sector over the week.

Broker Kaupthing said that, while there are corporate governance concerns, the reshuffle should alleviate concerns about Rose’s future and departure date while retaining key directors who can “put themselves in the frame for the top job if suitable”.

Shore Capital noted: “Sir Stuart will be intent on leaving on a high and not with the business struggling. With international set to advance over coming months, coupled with further initiatives at home, Marks & Spencer is unlikely to underperform the pack.”

Pali International initiated coverage of food retailers with a buy stance on Sainsbury’s, neutral on Tesco and sell on Morrisons. The broker said: “Morrisons has been the best momentum play in recent months, but we think it is now overvalued relative to Sainsbury’s, which has been unfairly oversold and is trading below its property value.”

Department store group Debenhams took analysts to see its new Derby store on Tuesday. Pali was impressed by the shop, but said ongoing investor jitters about debt, discounting and the dividend continued to hold Debenhams’ price back.

DIY group Kingfisher “has one of the most stretched balance sheets in the sector, with low cash generation and high operational leverage”, according to JP Morgan. The broker rates Kingfisher underweight and has a price target of 128p. Shore Capital advised hold after a meeting with management and said that, at 130p, Kingfisher’s valuation “appears increasingly compelling”.

HSBC initiated coverage of Woolworths with an overweight recommendation and price target of 16p. “Woolworths is a strong recovery candidate, which could release substantial value over the next two to three years by disposing of and demerging operating divisions,” the broker argued.

Findel is on Numis’s buy list. Recent share price weakness – including last week’s big fall – is “unwarranted”, said Numis. Findel should be protected from a wider retail downturn by its home shopping positioning and defensive educational supplies division, reasoned the broker.

AIM-listed department store business Liberty posted full-year losses up to£6.4 million from£2.3 million after reorganisation costs and investment in its Liberty of London brand. Sales edged up to£45.8 million.

Next week will provide a litmus test for the sector as a variety of retailers update, including electricals group Kesa, fashion giant Next and department store group Debenhams.

Topics