Taking stock post-election – Has retail rebounded? No, we don’t believe it has. There is growing evidence that it has remained subdued / steady, albeit we note it is very early: i) Listed retailer updates and our channel checks suggest no change, with housing categories still softer (Figure 2); ii) Footfall has seen no noticeable rebound post (Figure 1); iii) Business and consumer confidence measures remain soft (UBS Economics report). We acknowledge this is very short term and that we are yet to see any benefit of tax cuts or rate cuts flowing through to consumers.
What is priced in? Despite a short term share price bounce post the election (Figure 3), discretionary retailers continue to trade at a discount to the 3-yr forward relative PE. We believe that, on the whole discretionary retailers should trade at a discount given maturing industries, increased online threat (See UBS Q-Series) and the need to invest more in data and supply chain (empowered). By retailer JBH, HVN and SUL appear to be pricing in most optimism; FLT, GUD, BAP the most pessimism.