4042 days ago
Debt recovery specialist Begbies Traynor (BEG) has today issued data on the UK economy which should scare you shitless. The UK economy is not delivering real sustainable growth at all – we are just on a debt fuelled consumer binge, something a cynical Government is encouraging as we approach the 2015 election. The hangover will, I warn you, be dreadful. Begbies Q3 Red Flag report makes grim reading.
4299 days ago
I cannot figure out the consumer spending patterns in Bankrupt Britain – something does not add up
I have to admit that consumer spending patterns have me rather flummoxed. And this makes life, certainly when it comes to investment recommendations, just that little bit tougher. My problem is that empirical data does not seem to be backing up what has been a core macro-economic assumption for me. Well, it is in parts.
My assumption was that with most of our fellow citizens in this green and pleasant province of the EU still heavily indebted and, with a psychic sixth sense, aware that interest rates are bound to increase (something the bond market is telling you pretty explicitly); consumer spending would be pretty soggy this year.
In the run up to and after Christmas, things seemed to be going to plan. Trading across the High Street was pretty weak. Indeed, it was bad enough to push a number of high profile retailers with flawed business models over the edge. I see that Republic has now joined Jessops and HMV in retail heaven today. Surely this would only add to the consumer gloom?
4333 days ago
Yesterday Greggs (GRG), the leading bakery retailer in the UK with more than 1,670 retail outlets, released an update on trading for the Christmas and New Year period (5 weeks ended 5th January 2013) and for its 2012 financial year (52 weeks ended 29th December 2012). This included that the company anticipates that it “will report full year results broadly in line with expectations when we make our preliminary announcement on 13 March 2013”. However there were caveats and with concerns about the UK economy and consumer spending – particularly on the high street, the following is my take on the current outlook for this company…
4347 days ago
Insolvency firm Begbies Trainor grabbed the headlines just before Christmas with a claim that 147 retailers across the UK were zombies, the living dead, poised on the brink of insolvency. The headline was scary enough. But the detail was even scarier. I sense that the bloodbath on the high street will reach a rather unpleasant finale during 2013…
We know why high street retailers are in trouble. They face competition from giant online retailers who do not have expensive properties to maintain and enjoy huge economies of scale (i.e. they can screw suppliers). Worse, Tesco (and to a lesser extent the other supermarkets) grab an incremental share of the off-line non food trade each year. And finally, the overborrowed UK consumer (and it seems US consumer) has finally stopped spending. That trend will not change in 2013. In fact none of them will.
