High ranking retailers: Where to look for the best quality stocks on the high street

Thursday, Mar 28 2019 by
22
High ranking retailers Where to look for the best quality stocks on the high street

News that Mike Ashley’s Sports Direct group is weighing a bid for the troubled retailer Debenhams doesn’t come as much surprise. With a 29 percent stake, Ashley is Debenhams’ biggest shareholder, but the group’s fate is far from clear. Debenhams is labouring under sizeable debt (among other problems) - and its lenders could eventually end up calling the shots (whether Ashley likes it or not).

Debenhams is an extreme case but it’s symptomatic of the problems faced by a number of UK retailers. Traditional bricks and mortar stocks have long complained about the challenges of high rents and margin pressures caused by fierce online competition. Investors in the sector are well versed on how these factors can destroy margins… and even whole businesses.

One of the longest retail deaths in recent years has been HMV, the music and film chain. Back in 2013 the group slipped into administration and the PLC was liquidated a year later. But part of HMV lived on and some of its stores were acquired. But the new outfit went bust again last year, partly because it still couldn’t negotiate itself out of expensive store leases.

Meanwhile, news of struggling chains (both private and public) either attempting turnarounds or sinking completely, still make headlines. Among them have been the likes of New Look, Toys R Us, House of Fraser, Marks and Spencer, Patisserie Valerie (a fraud), Maplin, Carpetright, Homebase and Mothercare.

Another recent bust-up has been Julian Dunkerton’s effort to get himself back in control at the fashion retailer Superdry. Since stepping back from the business last year, Dunkerton has watched the chain’s valuation tumble from around £1.4bn to around £400m. But he and co-founder James Holder still hold a 29 percent stake. Dunkerton is keen to press his own strategy back on the business, but the board is so far saying no.

But aside from these examples, is it all bad news?

Look at the share prices of some of the best known quoted retailers in the stock market and you’ll find a mixed picture. It’s clear that in some cases, retailers have performed very well over the past year. In fact, investors in predominantly online firms like Boohoo.com and Asos, will vouch for the fact that retail stocks can deliver decent returns.

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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>


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Debenhams plc is a United Kingdom-based company, which is engaged in multi-channel business. The Company’s brand trades through approximately 240 stores in 27 countries. The Company's segments are UK and International. The UK segment consists of stores in the United Kingdom and online sales to the United Kingdom addresses. The International segment consists of international franchise stores, the Company-owned stores in Denmark and the Republic of Ireland, and online sales to addresses outside the United Kingdom. The Company's stores trade under the name of Debenhams other than the Danish stores, which operate under the Magasin du Nord banner. Its stores offer customers a range of services, including restaurants and cafes, personal shopping assistance, hairdressing and beauty treatments, nail bars and wedding or celebration gift services. Its Debenhams Direct (www.debenhams.com) offers a range of products and services for online customers. more »

LSE Price
1.83p
Change
-10.3%
Mkt Cap (£m)
22.5
P/E (fwd)
n/a
Yield (fwd)
n/a



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11 Comments on this Article show/hide all

peter freeman 29th Mar 1 of 11

JD Sports figures are all very impressive except for the dividend yield. I do not understand with such figures the dividend yield is so low. What is the explanation?

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peter freeman 29th Mar 2 of 11

Informative

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curenow 29th Mar 3 of 11
1

In reply to post #463718

It's a growth stock, it reinvests most of it's profits back into its business to maintain growth of sale and profit. Amazon doesn't pay a dividend either.

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Ted Johnson 30th Mar 4 of 11
2

Why is it that Joules is classified as textiles and apparels and thus not included in this screen of retailers when it so obviously should be?

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HumourMe 30th Mar 5 of 11

In reply to post #464013

Why is it that Joules is classified as textiles and apparels and thus not included in this screen of retailers when it so obviously should be?

Have to ask Thomson ... https://help.stockopedia.com/technical-guide/sectors/sector-classification

The link explains how they classify. Does it make sense with this explanation?

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herbie47 30th Mar 6 of 11

In reply to post #464023

No does not make sense, I see Mothercare (LON:MTC) is listed under "Textiles and Apparels", the market they serve is the public in retail shops, so why are they listed under textiles? Should be under Just like a lot of housebuilders are under Financials, the whole thing needs reworking.

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longknight 31st Mar 7 of 11

In reply to post #463718

I think it is justified in terms of the firm wanting to use the money instead to invest in future expansion and the board argue that investors are buying in for share price rise, rather than dividend.

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longknight 31st Mar 8 of 11

Hotel Chocolat (LON:HOTC) is another stock worth looking at in retail I think.

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HumourMe 31st Mar 9 of 11

In reply to post #464053

One for the:

5ca07a68c331bgreen.jpg

then. It seems to be a much wider issue that could affect screens etc . and it is either our understanding of how things should work, be labelled or an error. I've used the customer interaction tool in the past to query perceived data errors that have been subsequently fixed and would encourage others to also do so. I suspect it is more closely monitored than the boards :)


Classification, with a couple of worked examples, would make an interesting article, at least to me!

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millen 31st Mar 10 of 11
2

Yes I do agree there seem to be many non-intuitive anomalies in the classifications. I noticed this particularly on a recent thread talking about UK tech stocks. And if looking at a particular stock page, the 'peer group' companies shown at the bottom right often bear little relation to the business in question.

Of the 10 major Economic Sectors, for example, Financials includes many VCTs that I suspect most people would classify as Technology.

Digging into the Software & IT Services industry grouping we find many oddities like eveSleep (retail mattresses), Angling Direct (but not G4M), Autotrader (publishing?), FundingCircle, GoCompare (insurance?), Moneysupermarket, Koovs (fashion, yet not BooHoo), Rightmove (yet not Purplebricks), Triad (IT recruitment)..... OK, these are modern businesses that happen to use a lot of IT but to my simple mind their target markets generally are in more traditional sectors.

I accept the old FT classifications were past their sell by date but the Reuters Thomson effort doesn't fill me with confidence either.

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jules2k6 1st Apr 11 of 11

In reply to post #464083

I agree, there often anomalies in the classification of comparable stocks. e.g Falanx (LON:FLX) and ECSC (LON:ECSC)


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