Wednesday, 9 April 2014

Snap up a DIY bargain in Home Retail

The UK home improvements sector has done very well of late, boosted of course by a combination of a recovering domestic economy, and in particular the feel-good “wealth effect”  which has enveloped home owners as property price inflation has roared back.

Unsurprisingly, retail sales volumes in furniture and lighting have been buoyant, no doubt also aided by purchases following the recent widespread flooding along the Thames Valley – terrible for home owners there and for their insurance companies, but home improvement and furniture retailers have benefited from resultant replacement needs (see UK: Winter storms impact the Home Improvement market). According to Figure 1, furniture & lighting retail sales are showing a 6+% annual growth rate, with a sharp acceleration since the middle of last year.


1. UK FURNITURE & LIGHTING RETAIL SALES TRENDING HIGHER





UK housing the biggest macro driver of DIY

The two biggest quoted UK DIY retailers are Kingfisher (code KGF.L: B&Q in the UK, Castorama in France) and Home Retail (HOME.L: Homebase and Argos in the UK).  The share prices of both of these companies have been somewhat correlated to the UK housing market, with Kingfisher (the green line) in particular following the Royal Institute of Chartered Surveyors UK house price balance index (the black line) very closely over the last few years (Figure 2).


2. KINGFISHER & HOME RETAIL ARE VERY EXPOSED TO HOUSING


Note that Home Retail (the red line) did not rebound in line with the bounce in house prices that started in late 2011, but rather only bottomed out in share price terms in mid-2012, due to company-specific issues in Argos, as it battled a slump in sales of consumer electronics (TVs, audio equipment) with the consumer switching to buying these items online.


To read the rest of the article and see why I find Home Retail attractive,
please click on the web link below: 
  
  
Even if you are not so adept at putting together Ikea flat-pack furtniture, this may still be a great way to get a benefit out of the burgeoning DIY trend! 
  
Edmund 

  


2 comments:

  1. If you want to invest in the market, then your destination would be to indulge in the commodity market and do day trading that brings you a huge profit.

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  2. DIY home improvement is the way to go, especially when cash isn't readily available. Houselogic has a great website for lots of DIY guides and recommendations.

    ReplyDelete