Page 26 - DIY INVESTOR MAGAZINE - NOVEMBER 2018
P. 26

A PERIOD OF TURMOIL OR TRANSFORMATION FOR RETAIL?
Retailers have had a tough time from tipsters in 2018; might that be about to change asks James Bowden
    The struggling retail sector has proven to be a successful hunting ground for bearish professional tipsters so far this year. Shares of retailers tipped as ‘Sell’ and ‘Avoid’ by tipsters have subsequently fallen over 13% on average, compared to a fall of almost 10% in shares given similar ratings by brokers.
Of course, since British Home Stores (BHS) stores closed across the country two years ago, there has been a sense of inevitability that bricks-and-mortar retailers would urgently need to engage in some internal reflection to survive.
GOOD NEWS?
At a sectoral level both brokers and tipsters seem to be growing more positive about the prospects for UK retail.
Exactly 70% of broker notes in October have offered ‘Buy’ ratings to retailers which – other than short stint at the end of July – is the highest level seen in 2018 so far. The same applied to Tipsters: the level of ‘Sell’ ratings stood below 20% late in October – the first time this has happed since May.
While there have been some success stories, it’s been
a turbulent year so far for many big high-street names – perhaps none more so than beleaguered fashion retailer Debenhams (DEB), discussed later.
Of course, various factors have come into play through the year which have caused subsequent swings in tipster confidence in the sector. First, winter brought heavy snow and freezing temperatures, before a scorching summer and much needed feel-good events such as the World Cup and Royal Wedding offered some respite for retailers.
But slowing consumer spending, falling wage growth and increasing competition from online behemoths such as Amazon have hit retailers hard.
A recent study by Deloitte suggests almost as many store closures in the first six months of 2018 than
the whole of 2017. But tough conditions give rise
to transformation and ingenuity in a sector that has perhaps rested on its laurels for too long, and recent retailer restructuring plans have been received positively, spurring tipster sentiment to some degree.
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