Take a look at some of the most attractive shareholder perks in the retail sector
How shareholder perks can make every day a Black Friday sale
Following a profit flatline during 2017, 2018 has been on a negative trend for retailers.
- Q3 saw a fall of 35% in profits, according to our latest Profit Watch UK report.
- However, the likes of M&S, Bloomsbury, N.Brown and Moss Bros all provide investors with shareholder perks which means every day could be as discount filled as Black Friday for investors.
Market conditions are far from ideal for UK retailers. Political uncertainty, downgraded economic growth forecasts, unexpected weather, and a weaker sterling have all been variables that have raised the costs of stocking the shelves. All this negativity means that share prices across the whole of the sector are depressed, leaving investors with uncertainty as to whether there is value to be had in the sector.
The growth of online retailing, especially in the clothing sector, has made life more unpredictable for established high street names. According to our latest Profit Watch UK report - which looks at the latest quarterly and half-yearly results published by UK companies - despite sales collectively rising a touch, every retailer reporting results showed lower or flat profits. As the high street continues to battle with a squeeze on consumer spending, powered by lower purchasing power and rising competition from online companies, retailers are seeing their profits plummet.
After a calm 2017 with flatline profits, the first quarter of this year saw a dramatic 51% fall in companies’ profits. Powered by warmer weather and lower inflation, the sector slightly rebounded during Q2, but the recovery was just smoke and mirrors. Q3 again proved to be a difficult month, with retailers seeing their profits fall once again by 35%.
Recent months have seen more bad news piling up for the sector. Since the end of September, industry giants such as WH Smith, Superdry, and Sports Direct have all reported negative results. Retailing is generally cyclical, with businesses tending to perform better during economic booms than in recessions and periods of uncertainty (like the current one). With share prices and profits dropping, this Black Friday could potentially be extended to not only the products, but the companies themselves.
Investors have a unique opportunity to benefit this Black Friday and beyond - not only from shares trading at a discount, but on the products sold by the companies too. Many retailing companies from bookstores to clothing brands offer their shareholders “perks” or “benefits”, traditionally in the form of discounts on their products.
Some attractive examples of shareholder perks in the retail sector include:
- Bloomsbury Publishing offers 35% off its books to shareholders. The minimum holding is just 1 share which would cost about £2.13.
- N Brown Group, which includes brands such as Jacamo, offers shareholders 20% off its catalogue prices. Again, the minimum holding is just 1 share which costs £1.19.
- Moss Bros also offers shareholders an annual 20% discount on full price items, with its current share price at £0.31.
- Quintessential British retailer, Marks & Spencer, mail discount vouchers directly to qualifying holders; again investors only need to hold one share to qualify, which is currently priced at £2.93.
Whilst investors should never invest solely for the discounts the company has on offer, not least as they may find their investment has fallen in value when the need comes to sell it and get cash back, but looking around the market could help investors get into the habit of saving and investing as well as providing some help with the costs of life.
Make the most of this Black Friday. For less than the cost of a drink you could get extra discounts in your preferred retailers as well as owning a percentage of the business at the same time.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.