LIVE MARKETS-Don't turn your back on European value retailers yet

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DON'T TURN YOUR BACK ON EUROPEAN VALUE RETAILERS YET

Some of Europe's value retailers have struggled of late, but RBC equity analysts believe the structural advantages of the sector remain largely intact and that there could be reasons to be cheerful going forward.

"Notwithstanding economic pressures, we think several advantages of discounters remain intact," RBC writes, including leverage with suppliers and greater appeal to high income shoppers.

RBC also believes some companies in the sector are in a position to boost their dividend or increase share buybacks.

"Several value retailers remain strongly cash generative which gives them scope for higher cash returns," RBC says.

"ABF is undertaking a £500mn share buyback, Dunelm has recently paid a 35p special dividend and B&M should be able to start buying back shares, once it has redomiciled from Luxembourg."

RBC rates ABF ABF.L, B&M BMEB.L and Dunelm DNLM.L with outperform ratings and H&M HMb.ST and 3I Group III.L at sector perform.

(Samuel Indyk)

FOR MONDAY'S OTHER LIVE MARKETS POSTS:

EUROPEAN STOCKS FLAT, MINERS RISE CLICK HERE

EUROPE BEFORE THE BELL: STOCKS HEAD FOR UPLIFT DESPITE TARIFF ANXIETY CLICK HERE

IN GOOD SPIRITS AFTER HINTS OF TARIFF RETREAT CLICK HERE