NXT, JD., FRAS: Stocks to watch as disposable household income slumps

Millions of people in the UK are troubled by the cost-of-living crisis. A major rise in inflation levels in the past few months has pressurised the economy, which was already plagued by the effects of the COVID-19 pandemic and Brexit. It suffered an additional burden from the Russia-Ukraine crisis as the disruption in supply chains raised the input costs for businesses, leading to price hikes.

However, the wages have failed to catch up with the rising prices. According to the latest data from the Office for National Statistics (ONS), British households saw their disposable income squeeze between January and March this year. 

In the first quarter of 2022, the gross disposable income grew by 1.5%. However, it was offset by the 1.7% quarterly inflation, which means that the real disposable household income saw a 0.2% decline.

This is the fourth consecutive quarter that the household income has slumped, making it the longest period since the records began.

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The Bank of England, in its monetary policy report for May, had said that households are most likely to save less due to the high inflation levels and use their existing savings to pay for the additional expenses. Notably, household savings as a proportion of household resources grew significantly during the COVID-19 pandemic. 

Consumer spending habits have also seen a shift due to inflation. A survey conducted by the ONS recently showed that credit and debit card spending fell by two percentage points to 100% of its pre-pandemic levels of February 2020 average in the week to 16 June 2022. The falls were recorded in social, delayable, and staple spending.

In the wake of this data, let's explore the stocks of some London-listed high-street retailers.

Next Plc (LON: NXT)

The company retails in clothing, footwear, and home improvement products. With a market cap of £7,758.56 million, shares of Next were trading at GBX 5,724.00, down 4.15%, as of 11:37 am GMT+1 on 30 June 2022. The share price has witnessed a significant fall in the past six months, slipping by about 30%, while the one-year return currently stands at -26.85%. The earnings per share from the stock are presently at 5.31.

JD Sports Fashion Plc (LON: JD.)

The company sells branded sports fashionwear, footwear, accessories, leisure goods, and sports apparel. Its shares were down by 3.10% at GBX 112.40 as of 11:41 am GMT+1 on Thursday. Over the past 12 months, the share value has declined by 38.62%. The company is listed on the FTSE 100 index and holds a market cap of £5,983.44 million.

Frasers Group Plc (LON: FRAS)

The firm sells sports and leisure clothing, footwear, apparel, and equipment through its retail stores. It is listed on the FTSE 250 index and has a market cap of £3,215.31 at present. Frasers' stock was trading at GBX 654.50, down by 2.53%, as of 11:47 am GMT+1 on 30 June 2022. The share value has appreciated by 7.47% in the past 12 months, however, it has declined by over 15% on a YTD basis.

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.