If you have a significant exposure to UK discretionary retail stocks you may indeed feel in need of some therapy. The representative group of stocks I outline below were down 13% over the 12 months to the end of March-18. (Over the same period the FTSE all share [FTAS] was down 2%)
I will not dwell too much on the issues for retail stocks as there is no shortage of commentary on this. However it seemed clear that the all important Christmas period was going to be challenging to any already under-pressure retail sector, but there were some suggestions that retail gloom may have reached its peak at that a turn could be imminent. With this in mind one of my “big ideas” for 2018 was to be up at 7am every morning pouring through the trading updates to sort the wheat from the chaff.
Unfortunately sad family events just before the end of the year cut a hole in many of my plans and particularly this one. However reviewing this now, there is the personal upside that there was a whole lot of ‘chaff’ and not really much ‘wheat’. My representative group of stocks were down 18% in the 3 to the end of march (whilst the FTAS was down 8%)
The eagle eyed amongst you will note that I cherry picked the numbers to aid the narrative , so let me present the fuller picture
Retailers FTAS
Mar-17 – Dec -17 +6% +6%
Dec-17 – Mar-18 -18% -8%
12 months -13% -2%
It can be useful to step back and take a look at the numbers in this way, to blow away some misconceptions. Part of the reason for my current interest in the retail sector was the view that 2017 had been a dire year, but whilst there are many exceptions, the above stat actually debunks this as a generalisation, for much of 2017 my group of "retailers" tracked the broader market.
That said it is clear that there has been a lot of doom and gloom around UK retail in relation to the economy; earnings squeeze etc. There were signs at the tail end of 2017 that this gloom may have been starting to lift; “strong” retail sales figures for November lifted the gloom somewhat. One did not…
