Retailers face grim 2010, but some look cheap
Reading the latest figures, it seems at first sight that spending is back in fashion. But things are nowhere near as good as they look.
Have Britain's shoppers spent the last few months stocking up to beat any nasty surprises in the Budget?
At first sight, it seems that spending is back in fashion. Overall retail sales in February, including petrol, rose by a stunning 2.1%. Even without the rising cost of fuel- which is fast becoming a bigger part of most motorists' budgets- shop sales climbed by 1.6%.
But the latest figures are nowhere near as good as they look. They compare with a January we already knew was dreadful. And in fact it was even worse than first thought - the initial guesstimate of a 1.8% drop has just been revised to -3%.
As for this month, "even another 2%-odd rise in total sales in March would leave them down in Q1 2010 overall compared to Q4 2009", says Vicky Redwood at Capital Economics.
And the trouble is, we're unlikely to see that sort of rise this month. "The CBI distributive trades survey out earlier this week suggested that sales growth actually slowed in March", says Redwood. "Overall, consumers already tentatively appear to be struggling even before the full force of the fiscal squeeze has hit".
What's more, despite reporting good figures today, both Next and Kingfisher (B&Q's owner) are very cagey about this year's prospects. And the stock market cottoned on months ago, marking the sector's shares down sharply.
But it isn't all doom and gloom for retail shareholders. Some store stock prices have been hammered so hard over the last two years that they now offer good investment opportunities.
In this week's MoneyWeek magazine (if you're not already a subscriber, subscribe to MoneyWeek magazine) I've spotlighted five companies in this bracket. Even allowing for consumer spending staying in the doldrums for quite a while, these are shares that appear to have been hit far too hard and are now very cheap.