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We are used to seeing doom and gloom on our own high streets but with US retailers shedding $50bn in market value yesterday, it’s not all rosy stateside either. 

Gloom from retailers like Gap, L Brands (owner of Victoria’s Secret) and bookshop chain Barnes & Noble contributed to a 3.4% fall in the S&P Retail Index yesterday. Companies that are feeling pretty confident for the season didn’t manage to escape the pummelling either.

This is obviously a hot topic as we head towards Black Friday – and it seems that it’s not just UK retailers who are feeling nervous at the beginning of the holiday season. Target, Kohl’s and Ross Stores all fell by around 10% in trading as Gap personified the gloom by saying that it was reviewing its store portfolio for closures.

Naysayers are worried about the effects of rising wages because of a tight labour market, narrower margins (an attempt to stay competitive with e-tailers like Amazonand higher freight costs as well as potentially high levels of inventories that will have to be sold off at a discount in the coming months.

I think that there is definitely upside risk to both UK and US retail stocks as the majority seem to be fearing the worst.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Peter Watson

Peter Watson

Peter Watson founded Seiha Consulting, a career transition consultancy, after working in HR and four recruitment agencies. He was also a stockbroker for 13 years in London and Tokyo, advising some of the world’s biggest financial institutions on European and Japanese stock market investment. He started writing the Daily (previously known as “Watson’s WIFI”) to help candidates prepare for interviews – but soon found that many others wanted to read it as well!

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