This year could prove to be a “groundhog year” for retailers, with experts predicting a “very similar” backdrop to 2012.
Morgan Stanley, in its UK General Retail report, said many of the same burdens would be in place, forecasting no recovery in consumer spending.
Analysts Geoff Ruddell and Anisha Singhal said pressures on household income may actually be greater than last year, warning that current consensus earnings forecasts are “far too optimistic”.
“Consensus forecasts assume the UK retailers will deliver 12% earnings per share growth in the coming year,” the report said. “That is a similar expectation to this time last year, but during 2012 consensus forecasts were revised down by 13%. We think a similar outcome likely in 2013, but fear investors will be less forgiving this year.”
Since 2008 retailers have been making costs savings but the report suggests that these are now proving too difficult to sustain.
As a resultMorgan Stanley has downgraded its outlook for the retail industry in 2013 to “cautious”.