Tesco, M&S, Next: Retail stocks you may consider despite fall in sales

Highlights

• According to the latest figures by ONS, UK retail sales fell by 0.3% in February 2022 due to bad weather that kept shoppers away from the high street and rising fuel prices.
• The figure is well below the 0.6% rise forecast.
• Online businesses saw a fall in sales volume by 4.8% in February following a strong performance in the festive months of December and January.

The rising financial pressure on the UK households is just beginning as the surging cost of living will force them to cut their spending, despite Rishi Sunak offering tax concessions in the Spring Statement.

This is bad news for retailers as the recent figure from the Office for National Statistics (ONS) shows that UK retail sales fell by 0.3% in February due to bad weather that kept shoppers away from the high street and rising fuel prices that squeezed their household budget. The figure is well below the 0.6% rise forecast.

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However, online businesses saw a fall in sales volume by 4.8% in February following a strong performance in the festive months of December and January. But despite the fall, the online sale volume was up by 33.2% as compared to its pre-pandemic February 2020 levels.

As consumers started to regain confidence, more customers went out to pubs and restaurants and started returning to the workplace, which led to a fall in retail food sales.

According to ONS figures, the Non-food sale volume jumped by 0.6% in February, with 1.3% growth in department stores and 13.2% growth in clothing. However, stores offering household goods and other items saw a decrease.

What Is Stagflation? How Is It Different From Inflation?

According to GfK’s confidence barometer, UK’s customer confidence fell further by five points to -31 during the months as inflation unexpectedly increased by 6.2% in February, with Sunak’s Spring Statement offering limited support.

Tesco Plc (LON: TSCO)

Tesco Plc is the leading supermarket in the UK that has demonstrated tremendous growth and has raised its profit guidance recently. The company is also planning to shut down counters with low demand as consumer habits are changing.

At 8:30 AM (GMT), Tesco Plc’s shares were trading at GBX277.10, up by 0.49% as of 28 March 2022, with a market cap of £21,026.17 million. The FTSE 100-listed company’s share value has appreciated by 21.25% over the last one year, while its year-to-date return stands at -4.39% as of 28 March 2022. 

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J Sainsbury Plc (LON: SBRY)

J Sainsbury Plc is the second-largest supermarket chain in the UK. The company’s shareholders are set to vote on a resolution at this year’s annual meeting urging the retailer to commit to paying its workers with real living wages by July 2023 as record inflation grips the country.

At 8: 30 AM (GMT), J Sainsbury Plc’s shares were trading at GBX261.40, up by 0.69% as of 28 March 2022, with a market cap of £6,061.07 million. The FTSE 100-listed company’s share value has appreciated by 6.64% over the last one year, while its year-to-date return stands at -5.15% as of 25 March 2022. 

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Next Plc (LON: NXT)

Next Plc is a UK-based high street clothing, footwear, accessories, beauty, and home products, retailer. The company has recently reported an increase in total group sales by 34.1% to £4,861.8 million for the year ending January 2022, from £3,625.9 million in the same period in 2021, driven by a significant increase in the online sale as pandemic led lockdown. Its operating profit increased by 103.7% to £905.4 million and its profit before tax stood at £823.1 million.

At 8:30 AM (GMT), Next Plc’s shares were trading at GBX6,340.00, up by 0.92% as of 28 March 2022, with a market cap of £8,309.05 million. The FTSE 100-listed company’s share value has depreciated by -19.67% over the last one year, while its year-to-date return stands at -22.23% as of 28 March 2022. 

B&M European Value Retail S.A. (LON: BME)

B&M European Value Retail S.A. is a variety store chain, with a market cap of £5,602.87 million.  At 8:30 AM (GMT), B&M European Value Retail S.A. Plc’s shares were trading at GBX556.20, down by 0.61% as of 28 March 2022. The FTSE 100-listed company’s share value has appreciated by 3.15% over the last one year, while its year-to-date return stands at -12.30% as of 28 March 2022. 

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Marks & Spencer Group Plc (LON: MKS)

Marks & Spencer Group Plc is a retail company that provides clothing, food, and home products. The company has recently announced the appointment of Stuart Machin as its Chief Executive Officer as part of its planned succession process after Steve Rowe is stepping down on the company’s preliminary results on 25 May 2022. 

At 8:30 AM (GMT), Marks & Spencer Group Plc’s shares were trading at GBX156.40, up by 0.74% as of 28 March 2022, with a market cap of £3,041.00 million. The FTSE 250-listed company’s share value has appreciated by 1.46% over the last one year, while its year-to-date return stands at -32.54% as of 28 March 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.