UK consumer sectors – What did Santa bring in 2024?

Majority of companies underperformed in January

It is fair to say there was a positive skew to share price changes on the day that trading updates and results were released, with increases for around half of the companies tracked. Sadly, this did not carry through to the rest of the month as the share prices for almost 60% of the companies declined in January, and almost 80% underperformed the UK market return of 5%, likely due to macroeconomic factors and other news weighed (eg, in January, the Office for National Statistics reported disappointing retail sales for December). Focusing on the positives, the sectors that performed best in January were: household durables (Games Workshop on further upgrades); specialty retail (Pets at Home, Victorian Plumbing, WH Smith, Wickes and TheWorks.co.uk, albeit with variable changes to CY25e profit); and textiles, apparel and luxury goods (Burberry enjoyed significant upgrades to CY25e profit).

Profit trends more positive than share price reactions

The negative relative share price performance contrasts somewhat with the trends in consensus CY25e profit, which were a little more positive, suggesting investors are pricing in downgrades from here. Again, focusing on the positives, consensus profit estimates for CY25 increased or were maintained for 58% of the companies we tracked.

Where were the anomalies?

The general downtrend in share prices, despite positive trends in upgrades, naturally presents valuation opportunities. Companies that saw their share price fall in January despite upgrades to consensus CY25e profit include: Deliveroo, DFS Furniture, EasyJet, Hollywood Bowl Group, J Sainsbury, GYM Group, Marks & Spencer, Mitchells & Butlers, THG, Topps Tiles and Young & Co’s Brewery. We would also highlight that Greggs’ 23% share price decline looks excessive versus the 4% reduction in consensus CY25e profit, but we recognise that management has flagged a challenging start to the year for volumes following the reported weakness in Q424.