Time to Sell UK Retail Shares?
Another retailer succumbs to the dire trading environment as the Christmas of 2012 claims a major high street brand in the form of Jessops, the digital camera specialist.
This week has certainly been one to forget for most retailers, with many clothing and grocery stores suffering from poor trading over the festive period.
In contrast, the FTSE 100 has hit its highest level since May 2008, with UK stocks forging ahead on continued optimism that central bank support will see the global economy pick up this year.
This only serves to highlight the distinct disconnection between the UK stock market
and the broader UK economy.
There's no question that this recession/recovery has hit the retailer sector hard as consumers suffer from declining disposable income and continue to deleverage.
Every supermarket to have given a trading update so far this week has warned about the outlook for the consumer, which remains rather bleak because of high unemployment and stagnant wage inflation.
Bellwether M&S has also suffered in the past few weeks, with their food being the only bright spot once again.
I have to say that the last time I went to M&S, only yesterday, the shop was rather empty and all I bought was something to eat that evening.
Much of the clothing didn't excite me and it seemed pretty expensive when compared to other shops in the City that are selling the same, if not better items.
Nevertheless, despite all the high street woes, the financial markets continue to head higher.
By Simon Denham - 10 January 2013
Time to Sell UK Retail Shares? - Part 2
Update - 15 January 2013
The woe for the UK high street continues as HMV becomes the latest retail sector casualty.
Just after digital camera specialist Jessops went under, it's now the turn of the CD, DVD and games giant to turn to the administrators.
Unfortunately, HMV is a sad story of a company unable to foresee the winds of change within its industry before it was too late.
The household name was once massive, with almost every customer spending far more than they'd originally planned.
It used to be one of the ultimate browsing venues, but many of those shoppers will probably not even remember the last time they went into an HMV store.
Not even Christmas could save them and it will be a sad day if the store disappears from our high streets altogether.
In contrast, this morning's bright spot for retailers is the turnaround in Burberry.
Only a few months ago, slowing Chinese sales saw the retailer issue a profit warning. Whilst the stock market adage is that profit warnings come in threes, it would seem not for Burberry.
The Burberry share price
plunged to a low of around £10 in 2012, but the firm has since fought its way back above £14, trading almost 100p higher this morning alone.
Despite slowing sales in Europe, its global footprint and presence in Asia is outweighing the European recession and so the stock is marching back towards the dizzy heights of £16.
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By Simon Denham, 10 January 2013