By Jack Denton
The likely collapse of two of Britain’s major retailers, devastated by the economic impact of coronavirus, is boosting the companies that could find themselves on the list of high street survivors when the pandemic is over.
A number of FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -1.26% retailers marched higher in London trading on Tuesday after news of the demise of Debenhams and Arcadia Group. Marks & Spencer /zigman2/quotes/206225481/delayed UK:MKS -2.71% climbed 5.5%, JD Sports /zigman2/quotes/207007202/delayed UK:JD -4.15% rose 4.2%, and Next /zigman2/quotes/200704121/delayed UK:NXT -1.62% ticked up 2.9%. Frasers Group /zigman2/quotes/208345235/delayed UK:FRAS -1.06% , listed on the FTSE 250, rose 4.3%.
Thousands of employees’ jobs are on the line and more than 500 shops are set to close if Debenhams and Arcadia both fail . Debenhams has been in administration since April, but as Arcadia also went into administration late on Monday, a potential buyer pulled out of deal talks.
Arcadia, the retail empire owned by Philip Green that includes brands Topshop and Topman, last week failed to secure £30 million ($40 million) in funding it needed to cover debts.
“The retail house of cards on the high street is in danger of collapse with both Debenhams and Arcadia group now looking increasingly likely to face liquidation,” said Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown.
“A nightmare before Christmas is unfolding for 25,000 employees who will lose their jobs if buyers are not found for parts of both businesses,” Streeter said. “Arcadia Group’s collapse has set off a domino effect, with JD Sports pulling out of talks to buy Debenhams. Arcadia is the biggest concession operator in Debenhams and so its collapse into administration clearly put the frighteners on management.”
The FTSE 100, the index of London’s top stocks by market capitalization, rose 1.89%, with 88 of its 100 constituent companies gaining in Tuesday trading.
News from China also boosted London stocks. A private-sector survey showed that Chinese factory activity accelerated at the fastest pace in a decade in November, boosting FTSE 100 miners, which are sensitive to global trade and China’s economy. Rio Tinto /zigman2/quotes/208934945/delayed UK:RIO -0.66% was 1.53% higher while Anglo American /zigman2/quotes/201381512/delayed UK:AAL -1.88% climbed 5.2%.
The London-listed oil supermajors, BP /zigman2/quotes/202286639/delayed UK:BP -2.49% and Royal Dutch Shell , were also among the gainers, as oil prices rose after the OPEC+ group of petroleum-producing countries postponed talks on output until later in the week, according to reports. BP was 2.24% higher while Shell rose 2.6%.