As the Office for National statistics releases the latest UK retail sales figures Helal Miah, investment research analyst at The Share Centre, explains what it could mean for investors:
“The latest UK Retail Sales figures have come as a bit of a disappointment with December’s numbers showing volumes falling by -1.9% from November, materially below the consensus 0.2% growth. This was indeed the biggest month on month fall for several years. The year on year figures still showed a good increase, albeit at a more moderate pace than expected.
“It seems that the decline in shoppers visiting non-food stores was the biggest driver of the decline as the household goods segment saw a fall of 7.3%, non-store repairs down 5.3% and textile and clothing fell by 3.7%. This pattern was seen in the latest set of trading updates from big household names such as Next. Investors should acknowledge that the food retailing sector did much better with sales falling by just 0.5% and the trading updates from the big supermarkets have been, in general, quite encouraging.
“Although it is just one month’s figures, questions will be raised as to whether these numbers are a reflection of inflation induced rising energy prices, the weaker pound or the uncertainty around Brexit going forward. It also goes against the trend of strong consumer confidence and spending on credit.
“We wouldn’t want to suggest that this is that start of a negative trend, but the stock markets confidence in the non-food retail sector has waned in recent months. We too have become a little cautious on the sector with only a few ‘buy’ recommendations in what is a vast area. We therefore feel that investors need to be selective. We favour those retailers that have a strong brand and the ability to pass on price increase or those with a large online presence which is where the growth is.”