This week, the focus is on UK retailers, which are enjoying a renaissance thanks to a strong domestic economy and the tailwind of lower petrol prices.

IB Times UK Video Link:

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We as a nation spent £26.5bn (€36bn, $39bn) in the shops during February, ie £6.6bn per week. The latest retail sales data reveals we bought 5.7% more stuff from shops in the second month of the year than in 2014, an impressive growth rate.

Clearly the combination of increasing employment, rising wages and lower petrol prices are driving greater consumer optimism and are all leading us to open up our wallets and spend with abandon...

A schizophrenic retail sector:
Supermarkets pressured, non-food flies

Looking under the hood of retail sales statistics reveals two very different trends at work: firstly, supermarkets continue to have a tough time, with sales flat and prices under pressure (food prices on average 2% lower now than this time in 2014).

Secondly, in sharp contrast, the non-food retail sector is enjoying a boom (Figure 1), with a 5.3% increase in retail sales value over a year ago.

Figure 1. A tale of two sectors: Food retail flat, non-food booms

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Source: Office for National Statistics


Digging deeper, the sectors producing the best growth at the moment are clothing, electrical appliances and household goods (furniture, lighting, Figure 2), all growing at over 6% per year.

Figure 2. Clothing, electrical and household goods in the lead

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Source: Office for National Statistics. Data as of February 2015

In the UK retail space, the obvious names come to mind such as the veritable Marks and Spencer (LON:MKS), Next (LON:NXT) and even Whitbread (the owner of Costa Coffee, Beefeater Grill and Brewers Fayre).

So which companies should be making hay?
Debenhams and SuperGroup

But I would focus right now on two other retail names: department store chain Debenhams and the owners of the popular Superdry fashion brand, SuperGroup (LON:SGP).

I like Debenhams (LON:DEB) for a number of reasons:

  1. It sits in the current sweet spot of retailing, offering clothing, footwear and household goods in its department stores.
  2. Current trading is…

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