Despite the attempts by the American retail spending cousin Black Friday to gatecrash the classic Christmas spending profile, the week before and after Christmas will define the share price profile over the first few months of 2018 for many consumer and retail related companies. For most people spending money at the margin is a little tight and when combined with bigger shifts in the retail environment with the progressive rise on e-commerce outcomes, across the totality of consumer names outcome variability is going to be pretty large.
Success will go to those names who resonate with customers and there will be varying degrees of failure for those names who fail to achieve this. The last week has seen- in an effective warm-up for the key spending period over the next fortnight – results from the good to the…less good. DixonsCarphone (DC) have enjoyed a strong share price bounce over the last week since publishing results which highlighted good progress by their electrical unit but still noted patchy mobile phone and related trading. However, caution about the stock was already elevated and one out of two was good enough – a useful reminder of how pessimistically perceived many UK-listed consumer names currently are.
In contrast Swedish-listed Hennes & Maurtiz (HMB in Stockholm) which is a regular feature on UK and other High Streets struggled to get customers through their doors in a number of their more established geographical locations. An upcoming capital markets day in mid-February gives them the opportunity to reconnect with now very sceptical investors who can see the company’s 5%+ dividend yield and no debt balance sheet but have lost faith that their ‘fast fashions’ are as compelling at this moment in time. Sustainable dividends, by contrast, are a completely different matter.