Bellway is known for issuing trading statements that are both candid and concise, and the comments that accompanied yesterday's first-half figures from Britain's fourth-biggest housebuilder continued that custom: “tough” is the word it uses to describe the current market.

Conditions in the Midlands, Yorkshire and the North West are “challenging”, while the progressive tightening of lending criteria by the mortgage banks — Alliance & Leicester's loan-to-value ratio for first-time buyers has now fallen to 70 per cent — has curbed demand at even the more affordable end of the market where Bellway sits: its average selling price is £175,000.

Reservations to mid-March 17 were down 9 per cent on the year, an inevitable worsening from the 7 per cent dip reported in December. Although that is better than the falls of about 20 per cent reported by its larger peers, Bellway's July 31 year-end, which means its first-half includes relatively buoyant trading in August and September, makes comparisons difficult.

Those patterns also make yesterday's numbers, which showed a 4 per cent drop in pre-tax profits to £96.9 million, of limited value. If there are consolations they came with a 10 per cent rise in the interim dividend and Bellway's contention that trading in Scotland and the South East remains much in line with forecasts.

The other comfort is Bellway's low gearing, its caution kept it away from consolidation, which means it has a strong balance sheet to bolster its current land bank of 23,000 plots at reasonable prices. With the big three housebuilders having stopped buying land, prices are starting to show double-digit percentage falls in some areas.

But it is evident that the days of the 18 per cent operating margins recently enjoyed by Bellway are very much over. How far margins fall will be determined by the resilience of selling prices, but with the pressure on building costs still strong, both from labour and materials, the trend is clear.

Bellway's high return on capital employed — a still-healthy 20.9 per cent — and skill in churning a tight land bank makes it one of its sector's better bets when the market shows signs of turning. But that time is still some distance away if the American experience is any guide.

Even at 789p, against a net asset value of 934p, and a near-6 per cent dividend yield, the shares are best avoided.

Booker

Not all of Baugur's holdings in the London stock market did as badly yesterday as Debenhams, down 17 per cent. Shares in Booker, the refloated cash and carry chain where the Icelandic investor owns 31 per cent — its biggest disclosed position — were nudged modestly higher. This was after a year-end update that showed Booker to be trading in line with forecasts.

Full-year revenues are up a pedestrian 2.3 per cent, but the quarterly trends are encouraging. The growth of non-tobacco sales has picked up over the past three months from 2.4 per cent to 4.1 per cent, while the slide in tobacco (Booker is exposed to the smoking ban through serving 38,000 pubs) shows signs of abating: a 7.9 per cent sales decline has been cut to 5 per cent.

Elsewhere, strong cash generation has helped net debt to fall £26 million to £50 million, while tax losses inherited from Blueheath — the “virtual wholesaler” through whose reverse takeover Booker regained a stock market listing last year — should mean its effective tax rate remains low for some time.

But it is the scope for Charles Wilson, the former Marks & Spencer executive who served alongside Sir Stuart Rose at Booker in the 1990s, to rebuild the company's position in the delivery of wholesale supplies to retailers and caterers that excites: it has just £500 million of a £14 billion market. This time round, Booker is also assisted by the surge in online sales, up from £300,000 a week to £2.5 million in a year.

The expiry in May of Baugur's lock-up may unsettle in the short term, but Booker's defensiveness and strong double-digit earnings growth on a forward multiple of 10 makes the shares a solid hold at 24p.

Tribal Group

Whatever Tribal told investors in its January presentation at Fashion Retail Academy in London — an institution that it designed and project-managed — it appears to have worked. Shares in the provider of public sector consultancy services have since risen by 32 per cent.

They ticked higher again yesterday as full-year results provided evidence of solid progress under Peter Martin, the new chief executive. Revenues were up 8 per cent, pre-tax profits ahead 20 per cent, while net debt — thanks to the proceeds of last year's well-timed sale of its Mercury Health division — has fallen from £57 million to a negligible £7 million.

Further, Tribal's order book is up 15 per cent to £124 million, while more than half of this year's forecast sales are in the bag. Such visibility enabled the company to repeat its target of producing double-digit turnover growth while improving operating margins from last year's 7.6 per cent.

Above-average increases in government spending on health and education, which account for two thirds of Tribal's sales, should insulate the group from economic slowdown, while the opportunity to export its consultancy skills — notably in the teaching of English as a second language — and scope for bolt-on acquisitions should accelerate growth.

Meanwhile, next year's retendering of its biggest contract, a £50 million schools inspection deal with Ofsted, could see Tribal take on more work if it succeeds. At 135p, or ten times 2008 earnings, Tribal is worth buying on weakness.

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