Takko, Douglas, Retail - comment

Germany’s retail sales have dropped dramatically in June. Real turnover dropped further by -1.6% MoM to -8.8% YoY. Within that, food is down by the same amount MoM and a staggering -7.2% YoY - possibly due to the 11.9% inflation in that category, but also the rise in HORECA, which was up +8.6% in May (June not out yet).
Textiles are down -5.4% MoM and -10.1% YoY, which leaves total turnover in real terms -13.6% below 2019 levels. We think, however, that the numbers not only reflect inflation pressures and a struggling consumer, but also a very strong 2021 season following lockdowns and increased travel activity. The latter would be supported by rising turnover at gas stations of +6.4% MoM in real terms (still -8% YoY) after the introduction of subsidies. While these are German trends and the Corona effects are somewhat differently phased in every country, we assume the underlying phenomenon to be broadly similar across the continent. The UK are further advanced in their handling of the pandemic and trends there may be different, but to be cautious, we are considering these effects also for Matalan.