UK high street revival slackens amid cost-of-living crisis

Highlights

• The revival of shopper numbers since the pandemic has slowed down for the third month in a row.
• As per retail analysts Springboard, footfall moved higher by only 6.8% on September 2021.
• Soaring inflation and interest rates are likely to push shoppers to spend even more cautiously from October.

While UK households continue to tackle the escalating cost of living crisis, the revival of shopper numbers since the pandemic has slowed down for the third month in a row. As per retail analysts Springboard, footfall moved higher by only 6.8% on last September, which was lower than the 8.6% hike seen in August and 15.6% in July.

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While there was just a 0.3% hike in retail park visits as compared to last September, high street footfall was up by 9.5% against last year. However, when compared with last month's 13.9%, it was considerably down. The revival of the high street retail was also affected negatively due to the work-from-home setup, in which about 50% of the employees are still at home for at least some days a week.

According to Springboard, soaring inflation and interest rates would also push shoppers to spend even more cautiously from October. Diane Wehrle, marketing and insights director of Springboard, says September’s findings show that footfall has essentially not been impacted by the cost-of-living squeeze, with the gap from 2019 reducing only slightly from minus 13.2% in August to minus 12.6%.

However, when the comparison between footfall in September 2022 and September 2021 is taken into account, the actual economic situation post the removal of Covid restrictions is revealed.

While inflation and hybrid working conditions impact the high street retail recovery, UK investors can evaluate the performances of the following retail stocks listed on the London Stock Exchange.

Frasers Group plc (LON: FRAS)

Frasers Group plc is a retail and intellectual property firm based in the UK. The company’s market cap stands at £3,247.87 million as of 6 October. With a P/E ratio of 12.72, the group’s EPS lies in the negative zone at -0.17. The company’s year-to-date or YTD return as of Thursay stands at -11.95%. However, its annual return stands in the positive territory, at 7.69%. The FTSE 100-listed company has a turnover (on book) of £24,677.40 at present. FRAS shares were trading at GBX 677.50, witnessing a rise of 0.89%, at 8:10 AM (GMT+1) on Thursday.

Pendragon plc (LON: PDG)

Pendragon plc is among the country's top automotive retailers. The company’s market cap stands at £384.90 million as of 6 October. With a low P/E ratio of 6.45, Pendragon’s EPS (earning per share) lies in the positive zone, at 0.04. On YTD (year-to-date) basis, the company’s return has climbed to 16.85%. Meanwhile, its annual return stands at 50.39%. The company has a turnover (on book) of £135,003.24 at present. PDG shares were trading at GBX 27.20 at 8:15 AM (GMT+1) on Thursday.

Lookers plc (LON: LOOK)

Lookers is one of the leading car dealership chains in the UK. The company’s market cap stands at £270.30 million as of 6 October. With a low P/E ratio of 3.49, Lookers’ EPS lies in the positive zone, at 0.16. On a YTD basis, the company’s return as of 6 October stands at 0.19%, and the annual return stands at 9.76%. LOOK shares were trading at GBX 68.00 at 8:18 AM (GMT+1) on Thursday.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.