UK retailers have been taking a caning recently, on three main fears:
- Online taking market share: a natural fear, but omni-channel retail is the current vogue and this is hardly anything new.
- UK inflationary pressures: this is clearly a risk with many retailers, notably restaurants, seeing labour both as a major pressure on costs and a risk to sales as disposable income declines.
- UK recession fears: if inflation continues, a recession looks quite likely.
Yet at a recent conference on value investing, two of the presenters – both UK fund managers – recommended deep-value, bombed-out retailers. Nick Kirrage, co-head of value at Schroders, recommended Currys (CURY), while Edward Blain of Orbis recommended discount retailer B&M European Value (BME).