LET'S HAVE SOME FUN

20.12.05 :+0.25, (38.25) shares in Woolworths Group PLC, JJB Sports PLC and Matalan PLC were in focus this morning after a leading City analyst identified the three retailers as Christmas turkeys, repeating 'underperform' recommendations and cutting profit forecasts. Citing "stories from the high street, which we believe to be true" Seymour Pierce analyst Richard Ratner reckons Woolies' like-for-like sales in the key run-up to Christmas are down some 4-5%. "Whilst the emphasis this year was on margin, we wonder how much of an improvement will come through to the bottom line as the company appears to be promoting to drive sales," said Ratner, who cut his year to end-Jan 2006 pretax profit forecast for the variety store retailer from 51.5m to 48m and his forecast for the following year from 65m to 58m. He noted that Baugur, the acquisitive Icelandic group, has been increasing its stake but doubts it or anyone else will bid. Turning to JJB he reckons the sports retailer is being "killed" by Mike Ashley, owner of Sport & Soccer, and is now concentrating on its combined leisure centre/superstores as a defensive measure. He has cut his year to end-Jan 2006 pretax profit forecast from 41m to 37m and his forecast for the following year from 47m to 42m. Ratner predicts JJB, 39% owned by the family of Dave Whelan, the group's founder who stepped down as chairman in July but remains an executive director, will suffer "death by a thousand cuts" over the next few years. The analyst also believes Matalan, the discount and homewares retailer, is continuing to struggle. He estimates its like-for-likes for its second half to end-February 2006 are running about 9% down and doubts the anticipated margin improvements are coming through as advertising and promotions appear to have been stepped up. His current year pretax profit forecast is cut from 62m to 59m, his forecast for next year trimmed from 72m to 67m.