THE SUNDAY TIMES (UK): Inside the City: Dominic O'Connell: Retailers expect blue Christmas: “Royal Dutch/Shell (445p), which is likely to become the second-ranked company in the FTSE 100 when it lists as a single entity in London early next year, should enjoy a fillip from its continuing restructuring, but has dropped too many clangers to inspire confidence.” (ShellNews.net) 26 Dec 04

IT HAS been a cold Christmas on the high street. Some retail experts say this has been the worst festive shopping season for a quarter of a century. To add to the pain, retailers will find it hard to get up to their old trick of fudging Christmas sales by conflating them with figures from the Boxing Day and new year sales. The FSA has warned that if things are dire, retail groups had better look sharpish with profit warnings, rather than follow tradition and wait until the first or second week of the new year to provide updates The first statement will come from Next on January 5. If anyone rushes out an update before then, it’s safe to assume it can only be bad news. And if it transpires that a retailer has held back a dire Christmas tale until the January update, we should expect action from the City regulator. House of Fraser clearly heeded the FSA warning and went out of its way last week to say it would stick to its planned update on January 12.

In terms of winners and losers, it’s more of the same. All those who struggled throughout 2004 will have struggled at Christmas, notably Marks & Spencer (341¾p — which will try to recover lost ground with the mother of all sales starting today) WH Smith (323p), Boots (656p), Woolworths (40¾p) and JJB Sports (179¾p).

Winners will be harder to find, but niche fashion players are the best bet. Next (£16.50), Monsoon (245p) and Ted Baker (475½p) have weathered the winter storms better than most.  

Oil  

OIL has been one of the big business stories of 2004, and expect the same next year. We look at the extraordinary bubble in smaller oil-exploration stocks elsewhere (Agenda, page 5), but there is a more sober story to be told about the oil majors. The FTSE Oil and Gas index is up 16.5% this year, compared to 12.1% for the FTSE All-Share and 7.2% for the FTSE 100. The UK quoted companies, BP, BG and Shell, are up 12.5%, 22% and 6.9%% respectively.

Some observers think we will see the high point in the oil boom in February, when the big boys report their 2004 fourth-quarter results. Expect some stellar figures. Goldman Sachs predicts earnings 70% up on the same quarter a year earlier. But thereafter the weak dollar and a widely forecast slow decline in oil prices will trim profitability, with some analysts already reducing forecasts for 2005. But with oil prices predicted to stay above $30 a barrel for most of next year, oil-major profitability is not about to dive.

But investors might want to consider which provides the best haven in the face of a retreating oil price. Our pick is BP, whose share price (it closed last week at 512Åp) should be buoyed by the company’s plans to return cash to shareholders when possible. Royal Dutch/Shell (445p), which is likely to become the second-ranked company in the FTSE 100 when it lists as a single entity in London early next year, should enjoy a fillip from its continuing restructuring, but has dropped too many clangers to inspire confidence.

Parkdean Holidays

MY colleague Matthew Goodman bows to nobody in his knowledge of the caravan-park market, having scooped Fleet Street with a string of exclusives on deals in the sector. ABN Amro Capital has spent £270m buying first GB Holidays and now Park Resorts, Parkdean has bought properties from Bourne Leisure, and Cinque Ports Leisure has been put up for sale.

The deals have been done at around 10 times Ebitda (earnings before interest, tax, depreciation and amortisation), which begs the question about the rating of Parkdean, the industry’s only quoted player. It came to the market two years ago, listing on AIM at 100p, and closed on Friday at 247p.

Despite the rise, it still trades at only seven times Ebitda. Investors like its recent acquisitions, which, until ABN Amro’s spree, had made it No 2 in Britain. Full-year results are due on January 11; Goodman says it could be time for a rerating, and, as I said, he knows caravans.