Hedge funds have amassed bets exceeding £1 billion against major players in British retail, signaling concerns of further challenges ahead.
The Short Bet
Despite a cost of living crisis, British retail sales have held up better than anticipated. However, hedge funds are taking a more pessimistic stance, with B&Q owner Kingfisher remaining the most shorted company amid fears of cash-strapped consumers cutting back on DIY projects.
Short-Selling Explained
Short-selling involves borrowing shares of a company, selling them, and repurchasing them at a lower price to profit from the difference if the shares decline. Many hedge fund bets are against "pandemic winners" who saw a surge in sales during lockdowns but are now facing challenges as shopping habits normalize.
Primarked Down Kit
Primark is reducing prices on children's clothing as the retailer passes on the benefits of falling inflation rates. The move comes as Primark parent company Associated British Foods remains one of the few retailers not targeted by hedge funds.
Recruit Jobs Go in Slump
Recruitment firm PageGroup has been forced to lay off workers due to hiring difficulties, with a further 100 roles cut recently. The company has seen a significant decline in job flow, particularly in the UK, where fee income fell by 19.2% in the first three months of the year.
Inch has US Pinch
Car dealership firm Inchcape is selling its entire UK business to a US buyer in a £346 million deal. The move allows Inchcape to focus on its more profitable overseas divisions, as the UK arm accounted for only 7% of profits despite generating £2 billion in revenue.
CVC Goes Dutch
Private equity giant CVC Capital Partners plans to raise £1 billion in a stock market listing in Amsterdam, dealing another blow to the London Stock Exchange. CVC's diverse portfolio includes brands like PG Tips, Breitling watches, and stakes in rugby tournaments.
In Deep Trouble
Thames Water faces a critical deadline to present a viable survival plan acceptable to regulators and investors. The company needs to raise funds for leak repairs, but investors have been hesitant after a proposed bill hike was blocked. Thames Water's owner has already defaulted on a debt repayment.
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