Moody's: British retailers, beware of fellow European brands

Rating firm Moody's has warned that British retailers will be surpassed by their European peers in 2018 as slowing wage growth and a return of inflation dent disposable incomes.

In this report, accessed by ‘The Daily Telegraph’ Moody’s expects brands such as Next and Marks & Spencer to suffer from “anaemic growth or even a contraction of earnings” next year.

Analysts at the credit rating agency predict these retailers will “continue to face a challenge to retain their market shares and maintain profitability levels against the combined onslaught of a broad range of competitors, including value-focused

UK retailers to get the most of the post

“The looming prospect of interest rate rises will mean UK consumers continue to search for value and it will also curb any meaningful growth in discretionary spending,” said Moody’s.

The agency predicts UK retailers to grow earnings at an average 3.1 percent next year, compared with 5.2 percent for their continental rivals.

Meanwhile, "A rosier economic outlook for the majority of countries in Europe will offset fierce competition in many segments of the region's retail sector, underpinning median revenue and earnings growth of 3.0 percent and 4.1 percent, respectively, and supporting the stable outlook on the sector into 2018," said Vincent.

Image:Next A/W2017, Next Web