A Review of Retail Stocks — How the Pandemic has Affected Shares

The coronavirus pandemic significantly changed almost every aspect of life. One of the biggest impacts occurred within the retail sector, heavily altering the performance of retail companies, as well as how we as consumers interact with them. All these changes became clearly reflected in the retail stock market. 

The pandemic, through various ways, has massively affected the value movements of countless retail company shares. From the initial COVID-19 impact in 2020, all through to the end of 2021 and beginning of this year, retail shares have undergone rapid changes on a global scale.

By reading on, you will gain a thorough glimpse into the many ways that the pandemic has affected retail shares, and what this might entail for the future retail stock market – and its professional traders.

How has the pandemic impacted retail shares?

• The first wave

The pandemic first impacted retail shares in the early stages of 2020. Once the pandemic had grown to become a severe global concern, the majority of countries imposed their first lockdown restrictions. As a result, businesses were closed down, workers were sent home, and the often-smooth flow of the retail sector seemed to come to a halt.

With the financial futures of retail business in such uncertainty, there were several stock value decreases across the entire market. Not only were sales rates low, but traders began to question the likely success of many retail companies, and thus, the stock values starting dropping.

Some companies even saw greater misfortune and went into administration – along with all their shares. Debenhams (DEB), one of the UK’s major retailers, went into administration in April 2020, before succumbing to liquidation in December. This resulted in all the shares being suspended. Whilst the majority of retailers’ shares were heavily affected, some suffered outcomes worse than others.

• Retail bouncing back

However, for some companies, recovery from the initial impact of the pandemic began to take hold by the beginning of 2021. One of the main factors contributing towards this were the ways that these retailers handled e-commerce.

With physical stores being inaccessible, consumers turned to online shopping for all their needs. Almost half of all non-food retail sales in the UK were online throughout 2021. This helped increase investment in retail stocks, and begin to rescue retail share values.

Next (NXT) shares increased to an all-time high in April 2021, reaching £82.32. This was largely due to the 60% increase in online sales since the previous year. Next focused heavily on their online retail engagement, and also offered homeware products which were in high-demand throughout peoples’ home isolation period.

ASOS (ASC) and Boohoo (BOO) also increased their earnings per share (EPS) for the year ended February 2021. Compared to 2017, this was a 399% EPS increase for Boohoo, and a 67% increase for ASOS. This reflects an increase in both their corporate value, and interest in their share values. Peoples’ desire for comfortable lounge clothing, and the easy access of online retail was a huge factor in these developments.

• Recurring challenges

However, coming through 2021, repeated lockdowns and new coronavirus variants caused certain share values to decrease once again. The ASOS share price, for example, fell 52% by the final quarter of 2021. This retailer, amongst others, was impacted by the more severe lockdowns and increased variant cases – delta/omicron. 

With people losing time off work and business revenue suffering, there were less expenses being flown into retail markets. Also, this all disrupted the production chains for many retailers, meaning many companies failed to supply consistent in-flows of products, and thus, their stocks suffered.

• Promising outlook on 2022

As we now asses the present state of the retail market (February 2022), there are still some hints of uncertainty, with many retail stock values yo-yoing. However, certain circumstances are providing some promise for the future of retail shares. 

With vaccination rates increasing globally, and restrictions almost completely eradicated, people can once again find the time to indulge in retail, whether in-person or online. Companies are also adapting to accommodate a more home-central lifestyle. For instance, Amazon claim that their in-home entertainment platform Amazon Prime, is their ‘secret sauce’ for shares growth in 2022.

These re-assuring predictions can potentially aid in the recovery of many retail stock values, and hopefully, point towards a promising future for many retail share traders. With stock trading, there is always room for profit in times such as these. Start exploring different retail stock trades using a platform such as Plus500 stock trading, and take advantage of these value movements whilst you can.

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