德银-欧洲-非食品零售业-英国服装零售：平坦如饼-20180213-22页_2mb

Summary of UK Clothing Market Trends (12 Weeks to 14 January 2018)

Core Content

The UK clothing market remained flat over the 12 weeks to 14 January 2018, showing a slight improvement from a -2.1% decline in the prior period. This improvement was primarily driven by stabilized volume trends and a stronger first half of January compared to the challenging October. The market remained promotional, with discounted sales up 4.9% and full price sales down 3.5%.

Key Retailers Performance

• Next:
  • Lost 10bps of total market share.
  • Gained 20bps of full price share, the strongest among its peers.
  • Suffered significant losses in kidswear (-122bps).
• M&S:
  • Gained +9bps of total market share, the strongest on record.
  • The share gain was low quality, driven by discounted spend (+59bps).
  • Lost 7bps of full price share, improving from -36bps in the prior period.
• Primark:
  • Gained +28bps of total market share, slightly lower than the previous period's +31bps.
• Debenhams:
  • Gained +4bps of total market share.
  • Experienced its largest full price share decline since November 2013 (-30bps).
  • Full price trends continued to deteriorate, reflecting promotional peak trading.

Valuation and Recommendations

• AB Foods (ABF.L):
  • Recommended as a "Buy" with a target price of GBP2,630.00.
  • Valuation based on sum-of-the-parts (SOTP) method.
  • Key assumptions: Cal-18E P/E multiples of c.18x for Grocery and 31x for Retail.
  • Risks include slow store expansion and profit growth of Primark.
• Marks & Spencer (MKS.L):
  • Recommended as a "Hold" with a target price of GBP330.00.
  • Valuation based on DCF using WACC of 8.6%.
  • Downside risks: continued market share losses, lower GM gross margins, decline in Food LFL.
• Next (NXT.L):
  • Recommended as a "Hold" with a target price of GBP4,700.
  • Valuation based on DCF with WACC of 8.4%.
  • Risks include changes in consumer demand, market share shifts, and credit customer trends.
• Debenhams (DEB.L):
  • Recommended as a "Hold" with a target price of GBP33.
  • Valuation based on DCF with WACC of 8.5%.
  • Upside risks: success of current initiatives.
  • Downside risks: operational gearing and execution risk.
  • Sports Direct owns ~20% of Debenhams, affecting potential risks.

Market Share and Trends

• Total Market Share:
  • M&S: 9.4%
  • Next: 7.1%
  • Primark: 5.7%
  • Debenhams: 5.1%
• Yoy Change in Market Share (bps):
  • M&S: +9
  • Next: -10
  • Primark: +28
  • Debenhams: +4
• Full Price Share Changes (bps):
  • M&S: -7
  • Next: -30
  • Primark: +45
  • Debenhams: +26

Channel Shift and Online Performance

• The online channel outperformed stores for most retailers, but growth was not enough to offset store declines.
• Zara was the only retailer where online growth generated incremental spend.
• Kantar data shows the online channel contributed positively to market trends, while store sales declined.

Recent Research Highlights

• The report includes a back catalogue of monthly topics, such as the impact of Brexit, consumer behavior, and market share changes.
• Notes on recent performance include:
  • M&S: Analysis of switching behavior and food performance.
  • Next: Impact of kidswear and online business.
  • Debenhams: Financial distress implications at New Look and House of Fraser.
  • ABF: Focus on Primark's growth and international expansion.

Risks

• Market-wide: Improved or deteriorating consumer spending, recovery in allocation to clothing.
• Retailers-specific:
  • M&S: Continued market share losses, lower GM gross margins, Food LFL decline.
  • Next: Consumer demand shifts, competition from M&S.
  • Debenhams: Operational challenges, execution risk.
  • ABF: Store expansion, profit growth, international market entry.

Upcoming Reports

• Kantar WorldPanel is due on 12 March 2018.
• Company reports:
  • AB Foods: Pre-close trading update on 26 February 2018.
  • Next: Preliminary FY results on 23 March 2018.
  • M&S: FY results on 23 May 2018.
  • Debenhams: Half year results (TBC).

Summary of Key Charts

• Figure 1: Summary of Kantar release showing market and retailer performance.
• Figure 6: M&S saw a significant improvement in two-year stack.
• Figure 7: Debenhams saw its largest full price share decline since November 2013.
• Figure 8: Next returned to full price share gains.
• Figure 9: Next was the full price winner.
• Figure 11: Online growth was not enough to offset store declines for most retailers.
• Figure 13: Channel shift did not generate incremental spend in Q4.

Analysts

• Jaina Mistry
• Warwick Okines
• Charlie Muir-Sands, CFA
• Richa Jain

Disclosure

• Important disclosures are provided, including ownership and compensation by Deutsche Bank and its affiliates.
• Full disclosure can be found on Deutsche Bank's website under the "Disclosures Lookup" and "Legal" tabs.