Retail continues to struggle with Mackays (M&Co) entering administration, the latest sign of the malaise according to ShoreCap.
M&Co announced it entered administration over the weekend following a ‘sharp rise’ in costs and decrease in trading.
The clothing store has 170 sites across the UK.
“The mild autumn has not helped the UK apparel trade, albeit hats, scarves and gloves may be flying out of the warehouse with the current cold snap” added Shore, which forecast further struggles for retailers following “compression on British household incomes”.
Asos meanwhile continues to attract lots of speculation following the departure of CFO Katy Mecklenburgh.
Current gossip is that the UK retailer plans to appoint restructuring advisors to address its disappointing performance, said ShoreCap.
“Whether or not Asos has liquidity problems remains to be seen, albeit if there was a call for help to equity holders one imagines that it would be undertaken at quite a deep discount to the present share price” it said.
Mike Ashley-owned Frasers Group owns a 5% stake in Asos and may look to profit from any potential liquidity issue.
Shore Capital is a seller of Asos (544p), but has buy tags on ABF and Frasers with targets of 1,639p and 783p respectively.