Small merchants are strong players

Published:  31 July, 2009

LONDON: City analysts are cautious of any recovery in the merchant sector and expect large merchants to face tough competition from smaller rivals.

Howard Seymour, an analyst at Numis, said the larger listed companies have enjoyed some benefit from their smaller regional rivals going out of business, but that stage may now be over. "The small local players that are left are the stronger ones and they're doing better because people are propping them up," he said.

Paul Checketts, an analyst at Oriel Securities said: "I don't see builders' merchants fully recovering to any semblance of where they previously stood."

"The market in totality has contracted and it remains very fragile. It's probably not as bad as it was earlier in the year but it's a big leap of faith to imagine that the only way is up," he said.

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