Tesco, Sainsbury’s and Marks & Spencer face the biggest hit from the National Insurance hike announced by the government yesterday but the marginal impact on other retailers might be greater, suggests Citi.
Chancellor Rachel Reeves announced a 1.2% hike in National Insurance (from 13.8% to 15%) and lowered the threshold at which employers start paying NI from £9,100 to £5,000 per year.
Among the listed retailers, Citi sees an impact on underlying profits of between minus 2% to minus 8% in 2025.
Some of the impact will likely be offset by lower-than-budgeted pay awards or other cost savings.
According to Citi, pay amounts to between 9-19% of sales while NI contributions account for 6-11% of total remuneration costs.
“In absolute terms, the retailers most impacted are Tesco, Sainsbury and M&S.
“In terms of % impact on EBIT, the retailers most impacted are Sainsbury, Currys and Tesco.
“JD Sports and ABF are least impacted due to their geographical mix and lower exposure to the UK.”
Shares in Tesco, M&S and Sainsbury were all down today.