Rare Summer Sunshine on the Retail Sector

Though the outlook for most firms in the UK retail industry has been particularly gloomy so far this year, June provided some welcome respite, with the British Retail Consortium (BRC) and KPMG reporting that total retail sales rose by 2.3% across the UK – buoyed by factors such as the warmer weather and the relative success of the England national team at the World Cup in Russia. Likewise, tipsters and brokers also saw events in June and July so far to be good news for retailers, with the number of ‘Buy’ ratings towards firms within the sector increasing.

Sentiment in the sector is typically more bullish than bearish – to a large extent driven by the proportion of “Buy” ratings awarded by brokers – with the average tip sentiment score typically ranging between 3 and 4 over the last year (where a sentiment score of 5 represents a consensus ‘Buy’ rating amongst tipsters and brokers, and a score of 1 indicates a consensus ‘Sell’ rating). However - as can be seen in the chart below - sentiment towards firms in the sector typically grows less bullish in the early summer months, with the industry sentiment score reducing by approximately 0.25 points during June in both 2016 and 2017.

Sentiment Towards Retailers Increased Last Month

The chart also shows that this trend was bucked in 2018 though, with sentiment in the industry growing more bullish in June; the industry sector score increased from 3.68 to 3.85 over the period. This increasingly positive outlook grew steadily as the month went on, before plateauing in July to date.

It would appear, then, that tipsters and brokers saw the potential positive effects of the sunny weather and the national “feel-good” factor the country experienced in June on the retail sector. It can therefore sometimes pay off to look at the bigger picture in real time, and track changes in consensus opinion in order to identify emerging broad market trends – before they hit the news.

Stockomendation users are able to see the consensus opinion of all open tips tracked on our platform, and new developments are underway to make these tools even more beneficial to our community. You can check out which companies and sectors are trending over the last seven days, and view the original tipster research (where available). Our platform allows you to performance-track over 37,000 stock tips. Sign up now and take a look for yourself – it’s FREE!

Disclaimer: The contents of this article should not be considered financial advice. All information correct as at 12th July 2018.