Nation of failing shopkeepers

18 August 2008 By Rachel Sanderson

Baugur s reported lowball offer for Woolworths Retail only reinforces the reasoning behind the sector s low valuations. UK retail is structurally crippled. Oversupply and erratic management are shuttering this putative nation of shopkeepers. For better offers, look elsewhere.

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Baugur, an Icelandic investment company, has made a bid approach to Woolworths, a British high street retailer. The bid was in the low tens of millions of pounds, according to a person familiar with the matter.

The shares had lost around 70% of their value this year. Morgan Stanley analysts in a note published on July 12, 2007 said they assigned no equity value to Woolworths Retail because they believed it was structurally in decline. The bank discontinued coverage of Woolworths in May this year.

The UK leading nonfood retail stocks have declined 40% on average so far this year. The UK retail sector is the second worst performing after the banking sector.

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