NXT, KGF, TSCO: Stocks to eye as retail prices surge to highest level

Highlights

• The UK retail prices surged to their highest level in April since September 2011 due to the rising Covid concerns, the war in Ukraine, and soaring energy prices.
• The shop price annual inflation in April rose to 2.7% from 2.1% in March.
• The food price inflation increased from 3.3% in March to 3.5% in April, the highest since March 2013.

The UK retail prices surged to their highest level in April since September 2011 driven by the rising Covid concerns, the war in Ukraine, and soaring energy prices, the British Retail Consortium (BRC) said.

The UK retailers warned that sharply rising inflation will further create more challenges for households and businesses, including last month’s rise in the energy cap that pushed the average electricity and gas bill up by £700 a year. The UK households are already under extreme pressure after Chancellor Rishi Sunak raised the National Insurance contributions.

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The shop price annual inflation in April rose to 2.7% from 2.1% in March, whereas the food price inflation increased from 3.3% in March to 3.5% in April, the highest since March 2013.

According to BRC figures, fresh food inflation fell from 3.5% in March to 3.4% in April, its highest since March 2013 amid fierce competition between supermarkets that resisted price hikes on everyday essentials and the non-food inflation rose from 1.5% to 2.2% during the period, marking its highest since the data series began in 2006. Non-food products, such as electricals, furniture, and books, are the key inflation drivers since the record began in 2006, with retailers’ sales being hit by supply chain issues and weakening demand due to the cost-of-living crisis.

The price inflation of household goods, such as furniture, clothing, and toys, rose to 2.2% in April, the fastest rise in more than 15 years, and the prices of the shelf-stable food rose from 3.0% in March to 3.5% in April. Meanwhile, the global food price inflation has reached a record high of 13% in April alone, which is even higher for cereals and cooking oils amid warnings that they will further put pressure on UK food prices.

Let us look at 4 FTSE-listed retail stocks that may get impacted by the increasing inflation.

1. Next Plc (LON: NXT)

The multinational footwear, clothing, and home product retailer operates around 500 stores in the UK and through franchises over 190 stores across 36 countries.

With a market cap of £7,904.49 million, the FTSE 100-listed company’s share value devalued by -22.33% over the last one year as of 4 May 2022, while its year-to-date return stands at -25.64%. Next Plc’s shares were trading at GBX 6,058.00, down by 1.56%, at 8:40 AM (GMT), as of 4 May 2022.

Also Read: BP Plc profits soar amid calls for energy windfall tax. Should you invest?

2. Kingfisher Plc (LON: KGF)

Multinational home improvement company Kingfisher Plc operates over 1,470 stores across eight countries in Europe. With a market cap of £5,108.48 million, the FTSE 100-listed company’s share value devalued by -31.72% over the last one year as of 4 May 2022, while its year-to-date return stands at -27.61%. Kingfisher Plc’s shares were trading at GBX 245.40, down by 3.50%, at 8:40 AM (GMT), as of 4 May 2022.

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3. Tesco Plc (LON: TSCO)

The multinational supermarket chain, Tesco Plc delivers its offerings through its stores as well as online channels across three geographical segments including Central Europe, UK & ROI, and Asia Segment. With a market cap of £20,720.10 million, the FTSE 100 listed company’s share value appreciated by -24.80% over the last one year as of 4 May 2022, while its year-to-date return stands at -4.86%. Tesco Plc’s shares were trading at GBX 275.80, down by 0.33%, at 8:40 AM (GMT), as of 4 May 2022.

Also Read: Tesco, Sainsbury, Greggs: Stocks you may bet on with rising food prices

4. DFS Furniture Plc (LON: DFS)

UK-based furniture retailer DFS Furniture Plc specialises in sofas and soft furnishings through its three brands: Dwell, DFS, and Sofology. It operates in the UK, Europe, and Ireland through its website.

With a market cap of £433.38 million, the FTSE All-Share-listed company’s share value appreciated by -37.82% over the last one year as of 4 May 2022, while its year-to-date return stands at -37.58%. DFS Furniture Plc’s shares were trading at GBX 165.40, down by 0.84% at 8:40 AM (GMT), as of 4 May 2022.

 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.