Speculation that non-essential retailers won’t be able to reopen in England until late April has cast a dark cloud over shares in the sector. Shares in Next (NXT), JD Sports (JD.) and Dunelm (DNLM) were all weak ahead of Prime Minister Boris Johnson announcing his roadmap for coming out of lockdown.
Some investors had expected shops to reopen in the first wave of the reopening measures, albeit with social distancing measures still in place around stores.
Having to potentially wait another two months means retail managers will have to be rethinking their seasonal stock requirements, together with placing greater emphasis on the online channel to help keep sales ticking over.
In the case of Primark owner Associated British Foods (ABF), it doesn’t have an online sales presence for its clothes and so it will continue to depend on the food and ingredients side of its business to support earnings.
The Works (WRKS) was the worst hit on the stock market, falling 3.5%. While it has reported growth in online sales during the various lockdowns since the pandemic began, the business is arguably better known as a high street brand and tends to attract people who might be out shopping but not with any specific purpose.
The retail sector is a major employer and further delays to reopening shops will act as a drag on UK economic recovery.
Leaked information on Boris Johnson’s roadmap also implies that the hospitality sector won’t be allowed to reopen properly in time for Easter.
‘Missing the Easter weekend will be a major blow for the pubs industry as that is traditionally a strong period for trading,’ says Russ Mould, investment director at AJ Bell.
‘However, despite some disappointment at the likely pace of reopening for different industry sectors, we may only be talking a matter of months and investors should really be looking much further into the future.’