The cost of living storm sweeping across Britain’s retailers is buffeting companies ranging from e-card seller Moonpig to mattress firm Eve Sleep and the DIY business Kingfisher, which owns the B&Q and Screwfix chains.
It has become the new buzzword in company updates, as the Covid pandemic recedes, while Brexit continues to inflict damage on trade and staffing. A recession looks almost inevitable – according to some economists, we are already in it – as households and outlets from bars to shops buckle under the strain of energy bills, which have jumped mainly as a result of the war in Ukraine.
The mounting pressures are reflected in the share prices of companies that fared well during the pandemic: Moonpig stock fell about 11% on Tuesday, and is down 52% over the past year, Kingfisher shares lost more than 5%, and have slid 34% in the past 12 months, while Ocado shares lost 63% in the same period. Shares in Eve Sleep, which is fighting for survival and looking for a corporate saviour, tumbled 46% to 39p, taking its 12-month losses to 89%.
In a grim warning, the firm said it would need fresh funding next month unless it receives a takeover offer. It is dangerously close to running out of cash, and inching closer to administration, as indicative bids have not translated into firm offers, with interested parties perhaps waiting until they can buy the business out of administration.
“If further funding cannot be raised, or a firm offer for the company is not received before the company’s cash reserves are fully depleted, the board will take the appropriate steps to preserve value for creditors,” the company said.
Trading has been torrid in the homewares market – where Eve Sleep is the only listed bed and mattress retailer – forcing companies to offer steep discounts. The firm is promoting a year-long mattress trial with up to 45% off on all mattresses.
Moonpig, which enjoyed booming demand for its personalised e-cards and gifts for next-day delivery during the pandemic, has also been hit as people scrimp where they can. The malaise has spread across the retail sector: last week, the online grocery retailer Ocado, which enjoyed a sales boom during Covid, warned of an annual sales drop, and the venerable department store chain John Lewis reported a £99m first-half loss.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says: “Many more shoppers are expected to tighten their purse strings over the coming months and search for bargains as household bills mount.”
Kingfisher’s numbers paint a picture of the waning DIY craze which started when people were stuck at home during the pandemic, with profits falling 30% and sales down 4.1% year on year to £6.8bn in the first six months of this year. Instead of “nice to have” makeovers, customers are now piling into insulation to improve their leaky homes and help them cut soaring energy bills, which even with Liz Truss’s price freeze this autumn will still be double last year’s.
It’s going to be a tough winter, for households and businesses alike.