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TWST: So to sum up what you've said, you're negative on the sector, but within the sector there are nevertheless some stocks that an investor really shouldn't be anything less than neutral on?

Jones: Yes. I think I'm saying that a lot of the fundamentals don't look good, but the market has not ignored the fact that those fundamentals are not looking very good and they have duly hammered the ratings of some of these stocks. Now, as usual managements either respond to changed conditions or other people believe they can do better. I just believe that current levels, it would take only a modest sense of improvement for you to get some quite significant improvements in the share price. So the risk/reward ratio is beginning to look in the investors' favour, even though the sector as a whole faces tough trading conditions. One other point worth making; there are a number of smaller retailers who are much quicker on their feet and who have built dominating positions in their markets where the negativity does not apply in the same way. I am thinking of Carpetright, which dominates the UK multiple carpet market. Very strong, growing margins, in control of its costs, unlikely to be threatened by e-commerce, and really very reasonably rated and with a very healthy dividend yield. That is the sort of position with which I feel comfortable, and it is not going to get hurt. There will be occasions when business is stronger, with good housing markets, or when it is weaker, if there is great uncertainty; but over any period of time it really looks in a very strong position. The second one I would mention to you is Topps Tiles, which is the leading retailer of ceramic tiles. The great attraction again is that there is very little multiple competition apart from the DIY sheds, and for them it is a small element of their business. The market is growing because of course we tend to add more bathrooms, more toilets and conservatories, while we are even starting to put tiles on the floor. It has plenty of scope to add numbers of stores... it is not a going to be hit by e-retail - I think people like to see the colours and patterns, which is still not easy to do effectively on-line - and we are seeing a stock which is growing at 20% per annum and can do that over the next four to five years. The third area in which there are a couple of stocks is the value discounters. Leaving Matalan to the side for the moment, as I'm not sure I can justify the rating, good though it is as a company - two companies should be highlighted, the first is T. J. Hughes, which has got plenty of scope, again, to expand physically its business. It has a good return on its investment, is growing at 20% per annum, based on probably 15% growth in space, is very much into leading on brands, and will have shortly an e-commerce transaction site. The management will avoid the problem of returns by concentrating on non clothing branded lines heavily discounted. Given the growth rate and potential, the valuation is not demanding. The second discounter is Brown & Jackson, which is 70% owned by Pepkor, the leading discounter in South Africa. The price, despite the fact that the profits of the company are growing very well, has been weak for two reasons. First the management has made two bid approaches, one for Allied Carpets, and one, most recently, for British Home Stores, This has made investors cautious about strategic direction and funding. Neither of these bids has gone forward. Second, the Chief Executive has announced that Pepkor was prepared to reduce its holding by 10% to 60%, but this created a potential overhang of stock. The 35-40% fall in the share price has left the stock selling on a single-figure multiple despite growing its profits at 30% or more per annum.