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The trepidation about consumer spending that marked the start of 2025 appears to be easing — in the UK, at least.
Consumers had tightened their belts in the final quarter of last year — a savings rate of 12 per cent was just below the financial crisis peak of 12.5 per cent in 2010, Office for National Statistics data showed.
Yet saving rates fell in January and February and consumer credit take-up grew, as people relaxed and opened the purse strings.
“Consumers decided to spend instead of building up deposits again; a good sign for retailers,” Pantheon Macroeconomics analysts said.
This was certainly reflected in Next’s (NXT) upgraded guidance last month, in which the retailer said first-half full-price sales growth is now expected to be 6.5 per cent — 3 percentage points higher than anticipated back in January.
Next is still demonstrating reasonable growth in the UK, where it generates 82 per cent of full-price sales.
However, the fastest growth is coming from its international business, where it increased marketing spend by 85 per cent last year. Digital international marketing will increase by a further 25 per cent this year, although chief executive Lord Wolfson insisted that each campaign is tracked and only those generating a return of at least 50 per cent are continued.
Next has long been seen as a star performer in UK retail but is priced as such at 16 times FactSet consensus earnings — ahead of peers. So, with the company expecting slower full-price sales growth of 3.5 per cent in the second half as increased labour costs “weaken the employment market and negatively impact consumer confidence”, it is perhaps understandable that group sales marketing and HR director Jane Shields has cashed in some of her holdings. Shields (and a related party) sold 50,000 shares for a little under £5.5mn.
Buy in at Social Housing Reit
Things are changing over at Social Housing Reit (SOHO) where the new investment adviser, Atrato, has got its boots firmly under the table after taking over from Triple Point Investment Management this year, writes Natasha Voase.
The real estate investment trust (Reit) has had a tough time since scandal-hit Home Reit cast a pall over the sector in 2022. SOHO invests in social housing properties, focusing on purpose-built homes designed for people with mental and/or physical care and support needs.
Tenants have been an issue for the Reit. Two — My Space Housing Solution and Parasol Homes — have been causing it problems. The Charity Commission launched an investigation into My Space in 2022 over “potential conflicts of interest and possible mismanagement of funds”. It is therefore no surprise that Atrato has been busy resolving issues with My Space, as well as transferring properties previously leased to Parasol.
Chris Phillips, chair of Social Housing Reit, said in the company’s results this “proactive step [ . . . ] will help improve rent collection and resident occupancy”.
Managers at Atrato have decided to buy in. Ben Green, co-founder of the investment manager, bought £311,000-worth of shares on 3 April and £494,000-worth on 28 March. Fellow co-founder Steve Windsor made a £368,000 purchase on 25 March and a £138,000 purchase on 24 March.
Atrato is an experienced manager, having overseen Supermarket Income Reit (SUPR) from 2017 until this March. Shareholders in that Reit recently approved a proposal to internalise its investment management function.
