Dutch bank ING has released a fairly negative report on the future of European retailers. Its analysts see Tesco's weak business figures and Metro's profit warnings as the first signs of a weak fourth quarter.
“Consumer confidence is weakening in mature markets, as is the growth in emerging countries. In Europe, the euro and government debts remain problematic and new budget cuts are an additional reason to worry about most European retailers”, as the ING analysts say.
Sell Carrefour, Colruyt, Sligro!
ING has therefore lowered its advice for several retailers, like Carrefour because of its declining sale of non-food and its dependence of Southern European countries, where the crisis will lead to less consumer spending.
Tesco and Marks & Spencer are also “Sell!”, as over half of their home market sales is non-food. Metro barely manages to avoid that warning, because of its decision to sell Kaufhof and Real. In the Benelux, Belgian chain Colruyt (“slower profit growth”) and Dutch food wholesaler Sligro (“lower out of home spendings”) should also be avoided, says ING.
Better rating for Delhaize, Ahold, Morrisons
Delhaize, Belgium's other main retail chain, fares better, just like Dutch Ahold and British Morrisons. “Ahold finally started to adapt a more aggressive strategy towards growth, while it is on the right track with its Dutch and American e-commerce activities.”, says ING. Morrisons on the other hand grows “above average” and is “a pure player in food, unlike its main British competitors”.
Each year, ING also announces its “top picks” among retail shares: French Casino (“successful in emerging countries”), Portuguese Jeronimo Martins (“because of its Polish Biedronka supermarkets”) and – of course – Inditex (“aggressive and very profitable expansion”).