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Investing.com – It’s been a tough start to 2025 for UK stocks, with concerns about the UK’s financial framework weighing on businesses and consumers. On Friday, data revealed that UK retail sales fell in December despite expectations of a slowdown during the holiday season.
UK consumers pulled back on spending, with retail sales falling 0.3% in December, below consensus for 0.4% growth. However, Jefferies analysts are “cautiously optimistic” for the rest of the year.
In their “Real-time Retail Round-Up” report, Jefferies analysts said “a weak Christmas trading pattern is now evident.”
Value traders like Greggs (LON:)
Although these limitations did not significantly affect earnings estimates, market sentiment was very important.
The firm said that the best retail trends for Q4 2024 were reflected in their Retail Trends Barometers, which showed a pace of -4% through 2023, down to -9% in Q3 2024, and drop to -13% in the last quarter of 2024.
Looking ahead, Jefferies maintains a cautious outlook for 2025.
“Although we recognize that the sector has challenges to face (opex / NIC, consumer confidence), especially in the near future, we think that the recent good demand and the high ratio of storage should support 2025 better than expected in the market.”
Jefferies also emphasized the value factor, noting that the sector trades at approximately 11 times, which is a 15% discount to the long-term average.
They recommend “increasing productivity in a unique way” and identify their top picks for 2025 as Premier Foods (LON:), Frasers, and DFS.
