The General Retailers are trading on a four-year low in valuation terms as macro concerns take a toll on the sector. However, this isn’t really about external factors. Half of the stocks in our universe are up YTD, while half are down; the driving factor here is that structural growth businesses, or those with a strong and defendable market position are better able to handle the headwinds.
This is still a sector defined by true customer engagement (or lack of), space productivity (or lack of) and online capabilities (or lack of). The wider sell-off means top picks look more compelling than ever and the ‘lack ofs’ look exposed. Christmas will be fine, but there’s no macro help to bail out the weaker formats in 2018.