Berenberg evaluates retailers' risks as recession threat looms

Westwing SE

18/07/2022 12:09

** Berenberg expects European retailers to come under
pressure from worsening consumer demand as the prospect of
difficult winter looms especially in Germany amid elevated gas
and energy prices
    ** Recession in Europe is the broker's new base-case as
Russia's invasion of Ukraine has exacerbated high inflation,
rate hikes and supply constraints
    ** Companies that have strong relationships with premium
customers, the ones offering essential products, and those with
structurally high-margin business models are most shielded, it
says
    ** Demand for luxury and premium fashion products will
suffer, it adds, and companies offering non-essential products
and at more premium prices are more at risk
    ** Bike24  BIKE.DE  ("buy") remains the broker's top pick
among mid-caps, as it sees the online bicycle dealership best
placed to protect its positive margins 
    ** It maintains "buy" on home furnishings e-commerce
platform Westwing  WEW.DE  citing its solid cash position and
its products' potential to be among the first to bounce back
post-recession
    ** It downgrades home furnishings e-commerce firm home24
 H24.DE  and social media company Social Chain  PU11n.DE  to
"hold" from "buy"
    ** The broker says home24, Social Chain, online retailer
Fashionette  FSNT.DE  ("buy") and housekeeping accessories maker
Leifheit  LEIG.DE  ("hold") are the most exposed to the
weakening consumer sentiment 

 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))