Consumer confidence on a rise: 2 retail stocks to buy now

Highlights

  • GfK’s consumer confidence index increased by 3 points to negative 14 in November, compared to negative 17 in October as shoppers gear up for Black Friday and the festive period.
  • The rise comes despite the UK’s headline inflation nearing a decade-high and facing other macro-economic headwinds.

The consumer confidence index increased by 3 points to negative 14 in November, compared to negative 17 in October, according to the latest survey by consumer group data and analytics firm GfK. The consumer confidence in November 2020 was at negative 33.

Also, the consumer confidence index score increased for the first time after three months of downturn. The rise is attributed to UK shoppers’ gearing up for the Black Friday shopping and ahead of the holiday season.

Notably, the improvement comes despite several macro-economic headwinds weighing in the UK, including inflation at a near-decade high, concerns over a possible rate hike and the deepening of cost of living in the UK.

The major purchase index score, which is the consumer confidence indicator for purchasing big ticket products, rose by 7 points to a negative 3. Comparatively, the major purchase index score was at negative 10 in October.

In view of this, let us take a closer look at 2 FTSE 100 index listed stocks in the retail sector and their investment prospects:

  1. JD Sports Fashion PLC (LON: JD.)

JD Sports is one of the leading retailers of sports, fashion and other brands.

The company recently issued a statement, defending its executive chairman’s meeting with the head of footwear and apparel company, Footasylum.

The UK competition watchdog, Competition and Markets Authority (CMA) is currently conducting a review of JD Sports acquisition of Footasylum.

The CMA has banned JD from integrating Footasylum into the company, according to its initial order.

JD share price and volume

(Image source: Refinitiv)

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JD’s shares ended at GBX 1,170.00, up by 1.17 per cent on 18 November, while the FTSE 100 index ended at 7,255.96, down by 0.48 per cent.

 

The group’s market cap was at £12,070.04 million, and its one-year return was at 44.91 per cent as of 18 November.

 

  1. Kingfisher PLC (LON: KGF)

 

Kingfisher is a UK based multinational retailing group. The company reported its Q3 2021/22 trading update today.

 

Its Q3 2021/22 total group sales was at £3,246 million, down by 2.4 per cent on a 1 year like-for-like (LFL) basis (at constant currency). It was up by 15 per cent on a 2-year LFL basis (at constant currency).

 

The strong 2-year LFL trading performance was due to a rise in footfalls and in average transaction value.

 

The company expects its H2 2021/22 one-year LFL sales growth rate to be at the higher end of its guidance range announced earlier (between negative 7 per cent to negative 3 per cent).

 

It also estimates its FY 2021/22 adjusted pre-tax profit to be in the higher end of its previously announced guidance range of £910 million to £950 million.

 KGF share price and volume

(Image source: Refinitiv)

Kingfisher’s shares ended at GBX 337.20, up by 0.66 per cent on 18 November, while the retailers’ sectoral index ended at 2,989.68, up by 1.07 per cent.

The group’s market cap was at £7,059.72 million, and its one-year return was at 12.66 per cent as of 18 November.

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