It is fair to say that 2022 wasn’t a great year for those backing UK-listed retailers. A combination of soaring shipping and commodity costs, and a squeeze on consumers, ultimately meant many ended the year nursing share price losses.
For now, those things haven’t gone away, meaning 2023 looks set to bring more pain for many retailers. Still, there are some pockets of the market where things are looking a little rosier. Burberry is a good example, where, so far, there hasn’t been the same crunch on sales from shoppers cutting back. After all, if someone is in a position to drop almost £2,000 on a new trench coat, the likelihood is, they’re not facing as tight a squeeze as others.
What’s more, much is aligning at Burberry which could help spur its share price higher. China, for one, is yet to have fully reopened from Covid lockdowns, but is inching towards easing restrictions.
Meanwhile, a new English duo at the helm, in the chief executive and chief creative director posts, looks likely to put the retailer on track for a revival as one of Britain’s best exports. Retail might be a tricky place to be in 2023, but Burberry looks as well-placed to weather the coming year as any.
James Warrington, media and telecoms correspondent: WPP
Bosses at WPP probably feel a bit hard done by. Despite robust trading, the advertising giant saw its shares slump by almost 30pc in 2022. Now, the outlook is even worse. Digital advertising budgets are already shrinking and a wider recession is looming, with ad spend invariably the first to get cut.
Despite all this, there could just be an upside for investors. With a market value of around £9bn – half what it was worth when Sir Martin Sorrell was ousted in 2018 – WPP looks primed for a takeover. If a suitor comes knocking, shareholders will be in line for a healthy windfall. If not, there’s probably more pain ahead.
Eir Nolsoe, economics correspondent: Enphase Energy
If there was ever a time to invest in renewables, this is surely it. The energy crunch is forcing European economies and companies to rapidly accelerate investment decisions that would ordinarily have happened over a much longer time span. In every crisis, there are winners and losers.
Energy-intensive industries will have to reinvent or risk faltering, while renewables have much to gain from countries scrambling to secure their supply. My recommendation goes out to solar giant Enphase Energy. Its share price has surged by over 50pc this year. The squeeze on gas supplies from Russia has boosted demand for residential solar and batteries, while the growth of electric vehicles is also favourable.
Howard Mustoe, industry editor: Begbies Traynor
This year, sad to say, a lot of companies are going to go bust. A combination of high energy prices themselves; the effect energy prices are having for other input prices, like raw materials and wages; and higher borrowing costs are going to tip businesses over the edge. For some, on life support through cheap money which is rapidly coming to an end, it will be a long time coming. For others, it will extinguish grand and bold business ideas of the sort the economy needs to flourish.
Picking over the wreckage, and attempting to salvage the gems from the rust, is Begbies Traynor, the corporate restructurer. Its last boom was during the credit crunch and subsequent great recession. The shares fell off significantly thereafter, but they have been gaining since. With a dividend yield of 2.5pc and the potential for more work coming its way, it could be one to buy now and sell in a couple of years when, fingers crossed, the economy is back to growth.
Gareth Corfield, senior technology correspondent: Softcat
Last year was a disastrous one for tech stocks, especially for the US-based household names such as Google, Amazon and Facebook parent Meta.
Closer to home, the real opportunity is in enterprise software: mundane but vital productivity suites. If tech is an engine, enterprise productivity software is its lubricating oil.
Softcat plc is a British listed enterprise software maker. They’re down more than 30pc year on year, granted, but look at the likes of Amazon (halved from 1 January) and Meta, down two thirds over the same period. The market will bottom out and as inflation starts falling, it’s the likes of Softcat who are poised to reap the benefits.
Tom Rees, senior economics correspondent: Tesco
Since the pandemic and war, it’s been a mug’s game to tip a share by betting on the prevailing economic conditions over the next 12 months.
But, unless 2023 musters up an alien invasion or asteroid strike, I’m betting that we’re finally out of mega-shocks that have scuppered some of my tips in recent years.
Belt-tightening by shoppers, rising costs and staff pay hikes sent Tesco shares to a six-year low in October. But I think the consumer outlook will look a lot brighter by the end of 2023, as recession and rapid interest rate rises bring down inflation faster than many predict. A light at the end of the tunnel for shoppers and staff is why I’m betting on Tesco.
Rachel Millard, energy correspondent: National Grid