Time to dabble in retail stocks?
ABOUT three years ago my favourite stockbroker was offering the following wisdom: if you own any retail shares other than Amazon, ditch them now.
It’s hard to say that he was wrong. Clients who took that advice avoided numerous high street bankruptcies, the ongoing misery that is M&S, and the supermarket slugfest that is great for stretched families and lousy for investors.
Is it time to ponder a return to shopping stocks? Today’s figures from Next are typically robust, but then it is probably the best-run retailer in Europe.
If you bought (and held) Next shares when Simon Wolfson was appointed CEO in August 2001 you’ve reason to be pleased.
The stock was about 800p then, and is nearly 7000p today. Along the way there have been billions in share buybacks and dividend payments, with Next still throwing off enough cash to promise more this year. Beyond such stellar performers, the picture remains murky. The read-across from Next to the others suggests that retailers had an
OK Christmas. Which means they may do better than admittedly very low expectations. Peel Hunt agrees, suggesting to investors that now could be a time to invest in quality retail stocks, while it warns against “heroic calls on turnaround plays”. Don’t get carried away, says the broker, but “the cream will continue to rise to the top”.
If you think this year will be better economically than the last one, it stands to reason that folk will buy more stuff. Britain is no longer a nation of shopkeepers. But a nation of shoppers we remain.
