Omicron hit UK high street: Should you buy these 2 FTSE 100 stocks?

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Highlights 

  • December 2021 footfall in retail places dropped by 22.2 per cent in UK high streets and fell by 24.1 per cent across shopping centres compared to before the pandemic.
  • Springboard estimates that upon hybrid and work from home style of working achieves maturity, one can expect retail visits on weekends and evenings, longer dwell times.

The latest figures by retail research analytics firm, Springboard, has revealed that in December 2021 footfall at retail spaces dropped by 22.2 per cent in UK high streets, and fell by 24.1 per cent across shopping centres compared to what it was before the pandemic.

The drop was attributed to Plan B restrictions which came into effect to limit the spread of the Omicron variant. Some of those tighter measures included work from home guidance, which thereby caused shoppers to buy holiday gifts online instead of waiting for sales at stores.

Springboard estimates that as the hybrid and work from home system mature, it will cause a higher number of retail visits during the weekends and in the evenings.

Additionally, it estimates time spent during retail visits will be longer and a rise in shopping and dining as this will seem like an attractive choice post working from home.     

Let us explore the investment possibilities of 2 FTSE listed retail stocks amid this development:

  1. B&M European Value Retail S.A. (LON: BME)

B&M is a UK based variety store chain. The group’s total revenues in Q3 2022 stood at £1,395.2 million, up from £1,398.5 million in Q3 2021. Total group revenue growth in Q3 2022 rose by 0.1 per cent on a constant currency basis.

B&M’s UK one-year like-for-like (LFL) revenue growth was negative 6.2 per cent in Q3 2022, while it rose by 14 per cent on a 2-year LFL basis.          

The number of store rollout for the group rose to 1,110 stores in Q3 2022, up from 1,075 stores in Q3 2021.

Based on this, it now anticipates its FY 2022 group adjusted EBITDA (on a pre-IFRS16 basis) to be between £605 and £625 million, This new projection is above consensus estimates of around £578 million.

Image source: Refinitiv

The company’s shares were trading at GBX 536.60, down by 1.18 per cent on 24 January at 10:53 AM BST, while the FTSE 100 index was at 7,389.89, lower by 1.39 per cent.

B&M has a market cap of £5,436.66 million and a one-year return of 3.26 per cent, at the time of writing.

  1. Kingfisher PLC (LON: KGF)

Kingfisher is a home improvement retail company. The company completed its 2nd tranche of share buyback programme today. The second tranche was worth around £75 million.

The company has now returned £150 million out of the total £300 million share repurchase programme thus far.

The company’s Q3 2021/22 sales stood at £3.2 billion which was down by 2.4 per cent on a 1-year LFL basis, but higher by 15 per cent on a 2-year LFL basis

Image source: Refinitiv

The company’s shares were trading at GBX 316.60, down by 2.88 per cent on 24 January at 10:45 AM BST.

Kingfisher has a market cap of £ 6,747.36 million and a one-year return of 16.92 per cent as of date.


 

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