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Retail survivors can become thrivers in sector revolution, says Peel Hunt

The broker selected those companies which strengthened their competitive position, customer relevance and online share as top picks

ASOS PLC - Retail survivors can become thrivers in sector revolution, says Peel Hunt

As retailers prepare to resume trading next month, the acceleration of current trends is not forecast to slow down.

Many shops are expected to go under rather than reopening, while the shift to online continues to dominate the sector.

READ: Focus on retail survivors when shops reopen on 15 June, says top analyst

According to Peel Hunt, in this ‘retail revolution’ scenario the survivors from the pandemic can become thrivers.

The broker’s top picks are those who strengthened their competitive position, customer relevance and online share.

Investors in ASOS PLC (LON:ASC), boohoo PLC (LON:BOO), Pets at Home PLC (LON:PETS), Next PLC (LON:NXT) and B&M European Value Retail SA (LON:BME) have a good reason to expect strong return and cash generation, Peel Hunt said.

Analysts also pointed at house stocks JD Sports Fashion PLC (LON:JD.), Dunelm Group plc (LON:DNM), Joules Group PLC (LON:JOUL) and DFS Furniture PLC (LON:DFS) as ‘thrivers-to-be’.

Bike parts seller Halfords PLC (LON:HFD) is the “happy recipient of a tail-hurricane” while WH Smith PLC (LON:WHSM) could be “interesting when the travel dust settles”.

“This year’s forecasts will remain volatile, and we expect to be making a lot of changes as we get a sense of the speed of recovery,” analysts commented.

“The key, however, is not whether third quarter sales are down 25% or 40% year-on-year, rather it is how quickly profits recover over the next 2-3 years and which retailers are better placed to take market share as we move through financial year 2021.”

Quick facts: ASOS PLC

Price: 4689 GBX

AIM:ASC
Market: AIM
Market Cap: £4.68 billion
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