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Retailers: Five UK stocks that are worth a look

By Rob Griffin


A Greggs pasty
Greggs is one UK retailer that looks set to weather the current economic storm – Photo: Shutterstock

Retailers may be under pressure from the cost of living crisis, but companies such as Greggs (GRG) and Dr Martens (DOCS) are tipped to prosper in this challenging environment.

Stock market analysts believe the key to success is offering good value for money and having survived previous downturns.

Here we take a look at five UK-based retailers that may be worth considering, even if consumers’ purse strings tighten over the coming weeks.

Greggs (GRG)

The bakery firm enjoyed like-for-like sales growth of 27.4% over the first 19 weeks of 2022, with chicken goujons and potato wedges particularly popular.

In a trading update, the company said it had made a good start to the year, with sales in line with its plan and a strong pipeline of new shop acquisitions ahead. However, it acknowledged that market-wide cost pressures were increasing, and warned that consumer incomes will “clearly be under pressure” in the second half of the year.

According to Russ Mould, investment director at AJ Bell, Greggs is a “well-run operation with a good track record” and a reliable recipe.

“At least the nature of Greggs’ products should offer some insulation from cost of living pressures,” he said. “Spending just over a quid on a sausage roll is the kind of impulsive purchase which people will probably still engage in without thinking twice, unlike buying a new sofa or a new car.”

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JD Sports (JD)

The sports fashion retailer recently reported that total sales in its like-for-like businesses in the 14 weeks to 7 May 2022 were more than 5% higher than the same period last year. This performance is a positive reflection of “both the strength and breadth” of the group’s brand relationships and category offer, according to its trading update.

“It has also been achieved against a backdrop of a global shortfall in the supply of certain key footwear styles, which we expect to improve progressively through the year,” it added.

Despite these issues, management still believes the headline pre-tax profit figure for the year ending 28 January 2023 will be at least equal to the year ending 29 January 2022.

Russ Mould, investment director at AJ Bell, noted that the company’s shares had been very weak, not helped by the departure of boss Peter Cowgill.

“Perhaps the stock has now reached the point where its valuation is too attractive to ignore,” he said.

Pets at Home (PETS)

The pet care group recently revealed that its revenue hit £1.32bn ($1.66bn) for the 53 weeks to 31 March 2022 – and then gave an upbeat assessment of its future prospects.

The company, whose new chief executive Lyssa McGowan is due to take the reins tomorrow (1 June), also announced plans to launch a 12-month share buyback programme of up to £50m.

In a statement, outgoing chief executive Peter Pritchard insisted the pet care market remained robust and in growth.


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“We are well placed to accelerate our growth in market share,” he said.

Adam Tomlinson, an analyst at Liberum, pointed out the stock had ended full-year 2022 with “solid double-digit like-for-like growth” and a £144.7m pre-tax profit that was ahead of consensus.

“We continue to believe PETS will be able to maintain its strong growth trajectory over the medium term, and even on our reduced forecasts, it is supported by a very healthy balance sheet, 6.9% FCF yield, 3.9% dividend yield, and a return to double-digit profit growth in full-year 2024,” he said.

Dunelm (DNLM)

The homeware retailer’s trading update for the 13 weeks to 25 September revealed a year-on-year rise in total sales of 8.3% to £388.8m. It also pointed out that this increase was achieved against a “very strong comparative period” in full-year 2021, in which sales grew 36.7%. 

In a statement, Dunelm noted the macro outlook remained uncertain, particularly in regard to supply chain disruption and inflationary pressures, but gave an upbeat appraisal. 

“Whilst we are not immune to the challenges being widely reported, we feel well placed relatively to manage them,” it stated.

According to Jonathan Pritchard, an analyst at Peel Hunt, the company’s management has an “incredibly strong operational grip” on the business.

“Dunelm has proved to be remarkably resilient in previous downturns, performing well in absolute terms and accelerating market share gains,” he said.

Dr Martens (DOCS)

The manufacturer of the iconic boots and shoes revealed third-quarter revenue was in line with expectations at £307m – up 11% year-on-year.

“We remain confident in achieving market expectations for our first full year as a listed business, subject to no significant Covid impact in quarter four,” it stated.

The London-based company’s boots have been produced since the early 1960s and have proved to enjoy widespread appeal across age groups.

A recent report from broker Peel Hunt, which has been seen by, highlighted the potential impact of consumer and supply chain headwinds, but still expressed confidence.

“The medium-term opportunity remains significant, as DOCS continues to drive awareness and penetration into the core US and European markets,” it said.

Markets in this article

Dr. Martens plc
1.4130 USD
-0.156 -10.230%
Dunelm Group
11.200 USD
0.18 +1.660%
Dunelm Group
11.200 USD
0.18 +1.660%
27.19 USD
0.3 +1.120%
JD Sports Fashion
1.540 USD
-0.006 -0.400%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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