TO say we live in interesting economic times would be an understatement. Confidence is low and money is tight. And retail stocks often show investor nerves more prominently than other markets. But it isn’t all bad news: volatility in the market can serve to make the life of the spread better more exciting. So with the week ahead laden with data, we asked the trading experts what to expect.
Jamieson Blake of London Capital Group says: “Investors may have looked at Burberry’s share prices as relentless earlier this year, but after a peak in late July, the company took a turn for the worse. With a trading update tomorrow, hopefully the high end retailer can brush off reports from the Paris fashion show that luxury brands could be hit by the global slowdown fears and reinstate optimism that looking good isn’t going out of fashion.”
TOMORROW: MARKS & SPENCER
Michael Hewson of CMC Markets says: “Marks and Spencer, like a lot of other retailers, has felt the pressure of the consumer slowdown in recent months, especially on the clothing side from cheaper brands like Primark. Despite this, the shares have remained remarkably resilient in the face of higher costs and price-sensitive consumers.”
THURSDAY: WH SMITH
Angus Campbell of London Capital Group says: “Like many high street retailers, WH Smith is facing tough times during this consumer downturn. Not only are fewer people going to the shops, but fewer people are going through the UK’s airports, so WH Smith is feeling the pinch. Nonetheless, one of the UK’s oldest retail and news shops has continued to fend off stiff competition from supermarkets and other outlets following the demerger of its distribution arm in 2006 and the introduction of new concept stores. Its share price has been remarkably resilient to the recent sell off and remains firmly above the £5 mark.”
Ian O’Sullivan of Spread Co says: “High-street retailer Mothercare saw its share-price get hammered after announcing a pretty awful trading statement last week. The outlook for Thursday’s numbers therefore looks pretty bleak. Despite the shares being 41 per cent cheaper than a week ago, there is still too much uncertainty to be buying them.”
Will Heddon of IG Markets says: “Asos is a great company. It is well run and has delivered fantastic returns since its flotation. The market slide it experienced this summer has only served to place it in great value territory. Investors will be looking for good numbers to return the share to the levels seen earlier this year. Its low-overhead, off-high street nature may shelter it from the harsh winter facing the more traditional retailers. The lack of a dividend, however, may deter the more cautious investors not willing to take purely capital exposure.”