No cause to downgrade retail

At the start of this year, retailers such as Marks & Spencer’s Sir Stuart Rose struck a cautious tone about prospects for 2010. It would be a year, he said, when the total retail market was unlikely to grow much, if at all, and the battle would be for share.

Now, more than half-way through 2010, many store chiefs’ comments remain wary to the point of downbeat. On Tuesday, Dunelm boss Will Adderley was the latest to sound a warning note. He does not expect Dunelm to keep up its like-for-like growth rate as tax rises and public sector cuts hit consumer confidence. He added that it will, too, be tougher to improve gross margins as business costs rise. Such concerns have put retail out of fashion for many investors.

During the recession retailers proved themselves adept at coping with the unforgiving trading environment and confounded the gloomiest views of the City.

Trading conditions have not eased much and the screw may well be turned tighter yet. But, despite Adderley’s comments, Dunelm’s update this week was better than analysts expected. While the gloomy noises will hardly spark a sector upgrade, the prospects for a further downgrade don’t look any greater.

Sweet cash

Hotel Chocolat garnered headlines for its chocolate bonds issue, which raised £3.7m to grow the business.

The bonds - offered to the retailer’s Tasting Club members - may have been a fun way of raising funds but might also provide inspiration for other retailers.

As many still find the banks unwilling to lend, conventional financing can be difficult to come by.

But those companies with the right sort of product and close links to customers might find equally imaginative ways of securing investment.

It certainly wouldn’t work for everyone. A pick ‘n’ mix bond would not have saved Woolworths.

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