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The Markets
by Proactive
Proactive UK has moved.
Coverage of London’s small caps continues on proactiveinvestors.com
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The Markets
by Proactive
Proactive UK has moved.
Small-cap coverage continues on .com
Go to Proactive UK
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The Markets
by Proactive
Proactive UK has moved.
Small-cap coverage continues on .com
Go to Proactive UK

Retail

Wet February washes out retailers as share prices slide

It was a soggy session for retail stocks on Friday, with shares in JD Sports Fashion PLC (LSE:JD., OTC:JDSPY), Marks and Spencer Group PLC (LSE:MKS) and Next PLC (LSE:NXT) all falling 1.5-1.6% after the latest UK retail sales figures made for grim reading.

Official data showed retail sales dropped 0.4% in February, a sharp reversal from the 2% rise recorded in January. The numbers sent shivers through the sector, dragging down some of its biggest names.

Dan Coatsworth, head of markets at AJ Bell, had a simple explanation for the slump: "Rain stopped play for retailers hoping for a winning session in February.

"There's nothing worse than miserable weather for the retail sector, as consumers want to stay dry inside and not get soaked as soon as they step outdoors.

"Rain effectively washes away the chances of consumers going to the shops for browsing and making casual purchases, stripping sales back to just essential items."

There were, admittedly, a few silver linings. February's decline was less severe than the 0.7% drop analysts had pencilled in, and on a three-month rolling basis, sales were still up 0.7%, helped by a pickup in online retail and strong artwork sales at the start of the year.

But Coatsworth cautioned against getting too comfortable, warning that the Middle East crisis could trigger an inflation shock, consumer confidence was already wobbling, and the Bank of England might yet be forced to raise interest rates.

"Retailers will have to take the three-month figures as a win, as life could get a lot worse from here," he added.

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