Battle for Woolies' £2bn spoils

By Neil Craven for The Mail on Sunday
Updated: 07:13 EDT, 26 April 2009

Retailers are cashing in with a 'Woolies bounce' in sales after the stricken chain closed the last of its 800 stores in January.

Cashing in: Retailers are taking advantage of a 'Woolies bounce' following the chain's closure

Woolworths' sales of almost £2bn a year in video games, music, toys, children's clothing and household goods are now being fought over by the rivals that hastened its demise.

Computer games retailer Game Group surprised the market with better than expected results last week, sparking a surge in its share price. It closed 12% higher at 196¾p.

Investors are hoping that HMV, which has already benefited from the buoyant games and DVD market, can follow suit this week.

Meanwhile, Tesco said last week that it had outperformed High Street rivals such as Marks & Spencer with a drop of only 2% in clothing sales. Its overall profits hit a record of more than £3bn.

Newly promoted finance director Laurie McIlwee said the performance had been boosted by sales of childrenswear, a core part of the former Woolworths range with its Ladybird brand. 'We are much closer to where

Woolworths was on kids' clothing than a lot of others on the High Street,' he said.

Tesco's performance has contributed to a surge in the value of retail stocks this month as investors breathe a sigh of relief that news from the High Street is not as bad as expected.

Catalogue and internet retailer N Brown is expected to provide more good news this week with an eight per cent rise in profit to £82m. Analysts expect a 10% rise in its second-half dividend payment to 7.08p.

However, Home Retail group may disappoint with a poor performance at its Homebase chain, though its Argos business is believed to be holding up.

Analysts expect Homebase to have benefited from the boost to the gardening sector from recent good weather, but some believe it may have to write down still further the value of the chain if sales continue to deteriorate.

In October it wrote off more than £500m of value from Homebase, forcing the group into a first-half loss.