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Poor weather conditions won’t have helped retailers, leisure groups and transport operators
Thursday 08 Mar 2018 Author: James Crux

Consumer-facing stocks are expected to bemoan the impact of the ‘Beast from the East’ and Storm Emma when issuing updates over the coming weeks and months.

Snow and strong winds disrupted deliveries and left high streets, retail parks and shopping centres eerily quiet with footfall likely to have been dramatically lower year-on-year.

This will have proved distinctly unhelpful for several firms ranging from struggling department store Debenhams (DEB) and baker Greggs (GRG) to Argos-owner Sainsbury’s (SBRY) and even
CVS (CVSG:AIM), if the heavy snow prevented people from ferrying beloved furry friends to its veterinary practices. Pubs and restaurants will also have been affected.

Shore Capital analysts Clive Black and Darren Shirley comment: ‘We expect the inclement weather witnessed in the UK and Ireland to be reflected in forthcoming secondary market data with references no doubt too in some company statements.

‘Footfall is bound to be negatively impacted, so hitting retail sales, whilst the cost of fulfilment for grocers and online retailers is likely to be heightened.’

Dire weather coincided with a doom-laden week for the retail sector, already facing online channel shift, squeezed consumer spend, rising wages, rents and rates. This not only included news of the administrations of Maplin and Toys R Us, but also saw embattled Carpetright (CPR) and Mothercare (MTC) issue new profit warnings and flag crunch talks with their respective lenders.

The prevailing challenge for non-food retailers is highlighted by the latest (6 Mar) BRC-KPMG Retail Sales Monitor (RSM), showing in-store sales of non-food items down 3.3% on a like-for-like basis for the three months to February.

Back to the bad weather, Shore Capital adds ‘no doubt online orders also surged but whether or not deliveries were successfully made and at what cost to the retailer/delivery company, remains to be seen.’ And yet, ‘a balmy April and May can extinguish much of the cold memory of the chill and disruption of Emma and her mates,’ it continues.

‘However, warm spring-like weather likely to stir life in the dahlias feels a bit away as global warming seems to be distinctly somewhere else at this time.

‘British retail will be hoping that climate change does yield something more favourable and soon. For now though keep Storm Emma in mind as something non-recurring and exceptional when near data-points start to emerge.’ (JC)

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