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Highlights
- The drop in shoppers’ spending has hit retail sales in the UK. The sales decreased by 1% in June, compared to an increase of 10.4% in June 2021.
- Consumers are shifting their spending towards cheaper brands of food and non-food items due to high inflation.
With the soaring inflation crisis, UK shoppers have decided to reduce their spending for the third consecutive month. According to a recent report released by the British Retail Consortium (BRC) and KPMG, such a drop has not been witnessed since Covid-19 struck. The retail sales have dropped by 1% in June 2022, compared to an overall increase of 10.4% in June last year.
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Households are feeling the heat due to surging inflation after it reached a 40-year high of 9.1% in May. The food and drinks prices too were up by 8.6%. This has resulted in retail sales dropping by 1.3% from June last year.
According to the survey, consumers are now shifting their spending towards cheaper brands of food and non-food alike, as well as discretionary purchases such as kitchen appliances and homeware are being postponed. The survey further highlighted that the retailers had reached out to the government to reduce the business rates.
Though the Jubilee weekend did offer a temporary boost, despite that the food sales saw a 2.2% increase in the three months to June. Compared to that, the non-food sales fell by 3.3% on a total basis.
An Office for National Statistics (ONS) survey had earlier highlighted that UK shoppers are spending less on food than normal. It highlighted that between 22 June and 3 July around 49% of UK shoppers shopped less for food items.
However, despite the lull, let’s look at the three retail stocks to keep an eye on.
Howden Joinery Group Plc (LON: HWDN)
The London-headquartered multinational supplier of kitchen and joinery products, Howden Joinery Group’s market cap stood at GBX 3,453.54 million as of 12 July. The FTSE 100 constituent’s share price has depreciated by -28.53% and it has given a negative YTD return of -32.56% to the investors. At 8:10 AM (GMT+1) its shares were trading at GBX 607.80, down by 0.43% as of 12 July 2022, with Earning Per Share (EPS) standing at 0.53.
DFS Furniture Plc (LON: DFS)
DFS Furniture Plc boasted a market cap of GBX 390.53 million as of 12 July. The FTSE All-Share constituent’s share price has depreciated by -43.33% and it has given a negative YTD return of -42.25% to the investors. UK-based retailer of living room’s shares was witnessing a fall of 0.65% and was trading at GBX 152.80 on Tuesday. DFS had an EPS standing at 0.35.
Mulberry Group Plc (LON: MUL)
The British fashion firm on Tuesday was trading at GBX 305.00, along with a market cap of GBX 183.24 million as of 12 July 2022. The FTSE AIM All-Share constituent’s share price has witnessed a fall in the one-year period of 10.48% and its YTD return too gave negative returns of -14.55% to the investors. MUL on 12 July had its Earning Per Share (EPS) standing at 0.08.
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.
