To put it simply, there are two schools of thought concerning the UK consumer. One holds that the consumer economy is weakening. The Office for Budget Responsibility, in the fiscal outlook published alongside this week’s Budget, provided helpful forecasts for those making this argument. It has revised down its forecast for cumulative spending growth, between the first quarter of 2017 and the first quarter of 2022, from 7.7 per cent in its March estimates, to 6.2 per cent in its November numbers. The reason? Weaker productivity is expected to weigh on household disposable income growth.
Perhaps it already is. Step forward, Mothercare (MTC), whose chief executive Mark Newton-Jones painted a bleak picture of current footfall for traditional retailers. On his view, digital promotions and the run-in to Christmas will provide false hope. Click here for our retail specialist Harriet Russell’s view on what it means for the retailer.
Listen to the managers over at Woodford Investments, and you get a different reading altogether. Now that the post-referendum decline in sterling has passed through, they see deflationary forces moving back to the fore. Perhaps the real wage squeeze won’t have quite the impact that policymakers fear?
Consider the half-year results of fast-fashion retailer Quiz (QUIZ), whose estate encompasses the physical as well as the digital. Click here for Harriet’s take on its prospects. Bosses there are wise to the mixed blessing of the Black Friday rush, but the top line continues to impress. Of course, there can be growing segments in a shrinking overall market, but the retail sector will continue to provide evidence for any point of view.
There’s plenty more below. Don’t miss the expansion at Countryside (CWD), which continues to work well with the various players in the housing market, from local authorities to the private side. Our property specialist Jonas Crosland provides his inimitable analysis here.
A little earlier in the week, easyJet (EZJ) shared in its full-year results some of the benefits of capacity coming out of the European short-haul market. Can investors rely on this, or has it merely had a few tailwinds (ahem) within a longer-term cyclical challenge? Click here for our take.
