Judi Bevan

Investment special: Which shops to bet on as recovery begins

issue 29 June 2013

After a long, cold and sometimes lonely winter for shopkeepers, at last there are glimmers of sunshine. Retail sales volume surged in May as shoppers shelled out £6.8 billion a week, the highest figure since records began.

Although the rise was partly a recovery from a miserable March and April, depressed by the coldest spring for 50 years, it was also seen as the result of rising consumer confidence buoyed by better economic news and less fear of unemployment. Intriguingly, a survey by American Express claims people using loyalty card rewards more aggressively added up to £3 billion to household budgets over the past year.

Then there is the news that the housing market is finally picking up, as first-time buyers return in force. Mortgage lending has surged to its highest level since the 2008 crisis: the government’s Funding for Lending and Help to Buy schemes, designed to stimulate the market, may prove imprudent in the long run, but they are good news for retailers.

The stock market, as ever, anticipated some of these factors by pushing the shares of most retailers up over the past year. While the FTSE All Share index rose 14 per cent, the general retailing sector rose by more than 40 per cent. The best performers have been ‘recovery stocks’ that have survived while some of their rivals have disappeared. Among these were some I recommended here a year ago, such as the homewares merchant Dunelm, up more than 70 per cent, Sports Direct, up 60 per cent, and Home Retail, 70 per cent higher.

Conventional wisdom says it takes about a year from the beginning of a housing-market upswing before there’s a surge in buyers of new furniture, flooring and the like. Then comes the demand for the latest fridges, dishwashers and washing machines, not to mention the thinnest, widest, smartest televisions.

GIF Image

Disagree with half of it, enjoy reading all of it

TRY 3 MONTHS FOR $5
Our magazine articles are for subscribers only. Start your 3-month trial today for just $5 and subscribe to more than one view

Comments

Join the debate for just £1 a month

Be part of the conversation with other Spectator readers by getting your first three months for £3.

Already a subscriber? Log in