Shoppers expected to buy less and shift to cheaper stores to make budgets stretch further
Shoppers cross the road in Oxford Street, London, Britain. Picture: REUTERS
Retailers have already endured a tough year, navigating higher costs, supply chain issues and shoppers who have become more price conscious. All that has sent the FTSE 350 retailers index down 32% this year, putting it on track for its biggest annual decline since 2008. Now, with the UK economy in recession and inflation running at four-decade highs, things may be set to get worse.
The FTSE 350 retailers index is trading at just 11 times estimated earnings, compared with 24 times for the MSCI world retailing index, according to data compiled by Bloomberg. The dismal retail outlook has prompted ratings downgrades from other banks in recent months. HSBC Holdings, for instance, cut ratings on apparel retailers including Marks & Spencer Group and Primark-owner Associated British Foods at the end of October. Jefferies Group downgraded Kingfisher, J Sainsbury, Tesco and others the previous month, citing “tremendous upcoming pressures” on consumers.
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