Who will be the winners of 2012?
Who will be the winners of 2012? Some of the more gloomy observers warn there will be few retail victors this year as store groups brace themselves for another tough year of battered consumer confidence and falling sales, while other more optimistic onlookers hope the easing in commodity prices may deliver much-needed respite.
Although there were some notable Christmas casualties, including Barratts, overall the feeling is that the festive period was not as bad as some had feared, despite profit warnings in the run-up.
Peel Hunt is optimistic about 2012, forecasting sector-wide pre-tax profits to be in the range of flat to a rise of 7.6%. Analyst John Stevenson concedes the potential rise could be construed as “overly optimistic”, but points to falling commodity prices which will boost margins in the second half of the year.
He believes the growth will be largely driven by those store groups still on the expansion trail, although there are not too many of those around at the moment.
Among his tips for Christmas success are Dunelm, WHSmith and Asos. However, Stevenson expressed some caution for 2012, warning that slower economic growth in Europe could hit retailers with stores in the eurozone, including DIY group Kingfisher.
Stevenson has not ruled out more “business failures and significant profit warnings among the losers” of Christmas.
Seymour Pierce analyst Freddie George remains cautious on the sector this year, and highlights Asos as a potential loser, along with Home Retail and Debenhams. It’s too early to buy into the sector, he insists, citing a decline in volumes in 2012 that will rival 2008’s fall, as well as a high level of discounting.
However, it’s not all bad, says George, who picked Burberry, Next and Supergroup as Christmas winners. Here’s hoping more retailers will be added to the rostrum when they update the market in the coming weeks.