UK retailers could benefit from a double boost to consumer spending and confidence over the coming months from England's World Cup run and the arrival of Andy Burnham as Prime Minister, according to Shore Capital.
Retail analyst Clive Black believes England's progress to the World Cup semi-finals has already outperformed retailers' planning assumptions, providing an unexpected lift for supermarkets, convenience stores and food and drink operators.
"We would imagine that a semi-final place exceeds prudent budgeting by firms around the World Cup to leave much of the trade already 1-0 up," he said in a note to clients.
June retail sales data from the BRC showed total sales up 1.9%, boosting demand for groceries, clothing, sunscreen, fans and air conditioning units.
Black expects demand for beverages, barbecue food, snacks and convenience shopping to remain strong, helped by continued warm weather and football-related gatherings.
He also expects online retail to continue outperforming physical stores in forthcoming trading updates.
Looking beyond the tournament, Shore Capital sees cautious grounds for optimism under the new government, with Burnahm expected to be named PM this Friday.
Black said Burnham's recent speech in Manchester suggested a greater focus on economic growth, housebuilding and Whitehall reform than his predecessor, although investors should judge the new administration on its actions rather than rhetoric.
The broker said the appointment of advisers such as former Bank of England economist Andy Haldane and former Goldman Sachs economist Lord Jim O'Neill would be "big wins" for the consumer economy if confirmed.
"It is not time to dream," Black cautioned. "We just watch and listen. Let's see."
