The showdown on the high street over Christmas found the losers lagging well behind the winners as the City braced for a second salvo of crucial updates from some of the retail sector’s biggest guns.

N Brown, the home shopping group, said that it was on track to become a £1 billion business after a surge in sales, but ScS Upholstery, the sofa chain, issued its second profit warning in two months. Even Britain’s biggest supermarket came under pressure. An investment bank slashed its price target on Tesco by 22 per cent while Wal-Mart confirmed that it was considering a new format to compete with Tesco’s Fresh & Easy chain in America.

Tesco reports today, alongside Debenhams. Home Retail Group, the Argos owner, follows on Thursday.

The good . . .

The chief executive of N Brown said yesterday that his high-street rivals were “abandoning” older shoppers as the home shopping group emerged as a clear winner from the festive season.

The group, which has made its name by selling clothing designed for older and larger customers, said that like-for-like sales had risen 14 per cent over the 20 weeks to January 12.

Alan White, the chief executive, said that N Brown was taking advantage of a huge gap in the market as “hundreds of stores” concentrated on younger fashion. He added that N Brown was keen to go on the acquisition trail in its bid to double in size and become a £1 billion-a-year business.

Turnover in the current financial year to March 2008 should hit £600 million. Mr White said: “We want to get to a turnover of £1 billion. It has a nice number of noughts after it.”

N Brown designs ladies clothing up to size 38 and it caters for men with a 55in waist. It also sells Brut after-shave and net curtains. Mr White said: “The high street has abandoned the older customer. We are a specialist retailer and have been able to pick off a small part of the market.” Internet orders account for 28 per cent of total sales alongside N Brown’s more traditional catalogues.

the bad . . .

ScS Upholstery is scrapping its dividend and abandoning plans for four new stores after issuing its second profit warning in two months.

David Knight, the chief executive, said that footfall was down significantly. Like-for-like sales were down 16 per cent in the first three weeks of the Boxing Day and new year sale. He said that pretax profits in the present financial year could be only £2 million. “The climate is really difficult for big-ticket retailers,” he said. Shares in the group plunged 4p, or 8 per cent, to 43½p. They were trading at 531p a year ago.

ScS had been widely tipped to cut profit forecasts. Sanjay Vidyarthi, an analyst for Dresdner Kleinwort, said: “How long the storm will last we don’t know, but we expect ScS to be one of the survivors. Close your eyes and hold on.”

and the ugly

An investment bank yesterday hit Tesco with a double downgrade and cut its target price on Britain’s biggest supermarket by more than 20 per cent. The move by Morgan Stanley, a joint house broker to J Sainsbury, came with Tesco’s Christmas update due today.

It coincided with Wal-Mart confirming plans for a chain of food-led convenience stores in America to compete with Tesco’s Fresh & Easy business.

Geoff Ruddell, Morgan Stanley’s new retail analyst, said that the supermarket did not merit its present premium to the rest of the FTSE 100. He cut his price target from 480p to 375p and moved his rating on the stock from “overweight” to “underweight”. He added that Tesco’s like-for-like sales growth could slip to only 3 per cent in 2008-09. “Tesco has underperformed the FTSE 100 in three of the last ten years,” he said. “We think that 2008 will prove to be another such year.”

Tesco, which refused to comment, dipped 6p to 420p.

JJB off target as price cuts eat into margins

JJB Sports will miss profit targets for the year after slashing prices by up to 90 per cent over Christmas and the new year. JJB said that second-half pretax profits would be slightly below the £27.4 million achieved 12 months ago. Margins fell 400 basis points in the six weeks to January 6. Chris Ronnie, chief executive, said that the decision to clear excess stock meant that JJB was in far better shape for the coming year. “We have cleansed the business,” he said. Mr Ronnie is meeting Nike this month to discuss the sporting equipment group’s planned acquisition of Umbro, in which JJB owns a 10 per cent stake.

Ted Baker sales surge

Shares in Ted Baker, the fashion retailer, surged nearly 6 per cent. Ray Kelvin, the founder and chief executive, said that trading had been strong across the group in the run-up to Christmas, with sales rising 12.5 per cent. The shares, which have outperformed the UK General Retailers’ index by nearly 27 per cent in the past year, rose 28p to 507p. Philip Dorgan, an analyst for Panmure Gordon, raised his profit forecast by £1 million to £22 million.

TV shopping sales rise

Ideal Shopping Direct, the television shopping group, reported a near15 per cent surge in like-for-like sales over the last four months of 2007. The group, whose main channels, such as Ideal World and Create & Craft, are broadcast on Sky, said that the bestsellers were laptops, SatNav systems and pressure washers. Andrew Fryatt, the chief executive, said: “We are pleased that, despite the more challenging market background, we have been able to demonstrate strong sales growth in the second half.”

Surge in internet orders

A surge in internet orders fuelled an almost 30 per cent jump in sales at MandMDirect, the home shopping clothing and sports retailer, in the run-up to Christmas. Steve Robinson, the chief executive who left Tesco Direct in October, said that internet orders were up 51 per cent in the nine weeks to December 30. He said: “We believe we are well placed to take advantage of the softening in the market.” The company’s sales exceeded £70 million last year.

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