Major hedge funds have intensified their short positions against British retailers, anticipating disappointing Christmas trading results amid mounting consumer pressures. The strategic positioning suggests a bearish outlook for the sector as it navigates through a challenging festive period.
Ocado Group, recently demoted from the FTSE 100, has emerged as the primary target with five investors, including BlackRock and Gladstone, holding a combined 5.68 per cent short position. The list of targeted companies extends to prominent names such as Kingfisher, Burberry, and Boohoo, reflecting widespread scepticism about the sector’s performance.
The significant short interest comes as retail sales data for November fell below market expectations, despite early Black Friday promotional activities. The Confederation of British Industry’s latest distributive trades survey revealed a marginal improvement to -15 in December from -18 in November, though sales volumes remained notably weak for the seasonal period.
Footfall statistics paint an equally concerning picture, with figures showing an 11.4 per cent decline compared to the previous year in the final week before Christmas, according to Rendle Intelligence and Insights. The British Retail Consortium has issued warnings about an impending January “spending squeeze,” with consumer confidence in the economy plummeting eight points to -27 in December.
Market observers are keenly awaiting January’s trading updates, with Next scheduled to lead the announcements on January 6, followed by other major retailers including B&M, Marks & Spencer, and JD Sports. Helen Dickinson, chief executive of the British Retail Consortium, has cautioned that retailers face difficult choices between price increases or cost-cutting measures, including potential store closures and recruitment freezes.
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