Retail share prices battered despite strong Christmas performances

Recent share price falls wiped billions off company valuations and seemingly reflect concerns about wider factors that may affect trading conditions. These factors may include a dip in the strength of the sterling and worries over the economic outlook – as well as reaction to particular trading updates and worries over retailers’ rising costs.

Marks & Spencer reported what it described as a record Christmas but investors took flight. The food and clothing giant’s stock was down more than 7% by mid-afternoon on Thursday.

While M&S did well during the golden quarter, investors had hoped for more – even though trading conditions for retailers have been tough. Investec analyst Kate Calvert said: “Expectations of an upgrade were high coming into this trading update and while one has not been delivered, there is clearly strong momentum in the business and opportunities where execution could have gone better.”

After initially falling, Tesco’s shares stabilised and had edged down only slightly by mid-afternoon. The grocer achieved its highest UK market share since 2016 and reiterated upgraded profit forecasts made at thre time of its interim results. Broker Jefferies said as a result that the market reaction would be muted, “even if the unchanged guidance most likely reflects an overabundance of caution”.

Greggs was punished for softer trading than the City hoped for and lost more than 14% of its value by mid-afternoon, even though it achieved record annual sales of more than £2bn. Shore Capital analyst Darren Shirley said Greggs was “not immune from the gloom surrounding large element of the UK retail scene outside grocery”.

B&M was down almost 9% after it posted a quarterly fall in UK like-for-likes. Broker Peel Hunt maintained: “The shares have been harshly treated.”