M&S (MKS), Next (NXT) & WH Smith (SMWH): 3 retail stocks to buy now

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 M&S (MKS), Next (NXT) & WH Smith (SMWH): 3 retail stocks to buy now
Image source: dean bertoncelj, Shutterstock

HIGHLIGHTS

  • For the 19-weeks ended 14 August 2021, Marks and Spencer reported a 29.1% year-on-year increase in overall revenue.
  • For the 13-weeks ended 30 October 2021, Next Plc’s full-price sales rose by 17.0% compared to 2019.
  • WH Smith’s travel revenue for H2 was 38% of 2019 figures, and in high street, its total revenue in H2 was 85% of 2019 figures.

UK shoppers spending rose in October despite growing concerns about increasing inflation. According to the British Retail Consortium (BRC), retail spending in the UK increased by 1.3% in October 2021 compared to October 2020. It recovered from the slow growth of 0.6% in September, where consumer spending patterns shifted to panic-buying for fuel, resulting from the tanker driver shortage.

Last week the Bank of England forecasted that price inflation would reach around 5% in April 2022 and would impact consumer demand due to post-lockdown supply chain issues and higher energy prices. Additionally, the limited availability of stocks is anticipated to result in a lacklustre discount season this Christmas.

Another survey by Barclaycard revealed that broader household spending in the UK increased by 14.2% last month compared to October 2019. Additionally, spending on entertainment is also growing as cinema-goers flock to theatres to catch up on their favourite movies, which was missing during the whole of last year due to the pandemic-imposed restrictions. This is expected to offer a boost to the likes of Cineworld (LON: CINE) and other cinema/theatre operators. An increase in consumer spending was also reported on digital subscriptions and travel. Below is a detailed review of three retail stocks – Marks and Spencer, Next and WH Smith.

M&S, Next & WH Smith: Market cap and One year return

(Data source: Refinitiv)

Marks and Spencer Plc (LON: MKS)

Marks and Spencer is a British retailer engaged in selling clothes, homeware and food products. The company recently reported that over 40 per cent of its range of 85 products offerings, including Berkshire Bronze turkeys, Aberdeen Angus beef joints and crowns, which constitute the retailer’s guaranteed “food to order” service, was sold out.

For the 19-weeks ended 14 August 2021, Marks and Spencer’s reported a 29.1% year-on-year increase in overall revenue. Its clothing and home products revenue grew by 92.2% year on year, while international sales revenue increased by 39.7% year on year.

The shares of Marks and Spencer closed at GBX 190.30, down by 1.86% on Monday, 8 November 2021. The market cap of the company currently stands at £3,797.30 million, and the shares returned 97.86% in the last one year to shareholders.

Next Plc (LON: NXT)

Next is international homeware, clothing, and footwear retailer. It operates nearly 700 stores in the UK, Europe, Middle East and Asia. For the 13-week period ended 30 October 2021, the company’s full-price sales rose by 17.0% compared to that in 2019. The company’s total online sales rose by 40% during the period compared to 2019/20 figures.

Next Plc’s full-price sales guidance for Q4 2021 stands at 10%, and for full-year profit before tax stands at £800 million.

The shares of Next closed at GBX 7,988.00, down by 1.65% on Monday, 8 November 2021. The market cap of the company currently stands at £10,798.14 million, and the shares returned 30.57% in the last one year to shareholders.

WH Smith Plc (LON: SMWH)

WH Smith operates a chain of railway stations, ports, airports, hospitals and service station shops. It is engaged in sales of books and magazines, stationery, confectionery and newspapers. The company’s revenue for the 8-week period ended 28 August 2021 was 71% of 2019 figures.

WH Smith’s travel revenue for H2 was 38% of 2019 figures, and in the high street, its total revenue in H2 was 85% of 2019 figures. 

The shares of WH Smith closed at GBX 1,60.50, down by 0.36% on Monday, 8 November 2021. The market cap of the company currently stands at £2,181.60 million, and the shares returned 61.37% in the last one year to shareholders.

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