The cost of living sweeping across UK retailers is hitting businesses ranging from e-card seller Moonpig to mattress firm Eve Sleep and DIY company Kingfisher, which owns the B&Q and Screwfix chains.
It has become the new buzzword in business updates as the Covid pandemic eases as Brexit continues to damage trade and workforce. A recession seems almost inevitable – according to some economists we are already in it – as households and shops, from bars to shops, are collapsing under the pressure of energy bills, which have risen mainly as a result of the war in Ukraine.
The mounting pressure is reflected in the stock prices of companies that did well during the pandemic: Moonpig stock fell about 11% on Tuesday and is down 52% in the past year, Kingfisher shares lost more than 5% and are down 34% declined in the past 12 months, while Ocado shares lost 63% over the same period. Shares in Eve Sleep, which is fighting for survival and looking for a business savior, fell 46% to 39p, bringing its 12-month loss to 89%.
In a stark warning, the company said it would need new financing next month unless it receives a takeover offer. It’s dangerously close to running out of cash and getting closer to administration as indicative bids have not translated into firm bids, with interested parties perhaps waiting to buy the company out of administration.
“If no further financing can be raised, or if a final offer for the company is not received before the company’s cash reserves are fully exhausted, the board of directors will take appropriate steps to preserve value to creditors,” it said. Company.
The trade in the household goods market – where Eve Sleep is the only listed bed and mattress seller – forces companies to massive discounts. The company is promoting a one-year mattress trial with up to 45% off all mattresses.
Moonpig, which enjoyed huge demand for its personalized e-cards and next-day delivery gifts during the pandemic, has also been hit as people are cutting back where they can. The slump has spread across the retail sector: last week online supermarket chain Ocado, which was experiencing a surge in sales during Covid, warned of an annual drop in sales, and venerable department store chain John Lewis reported a £99m loss in the first half.
Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, said: “Many more shoppers are expected to tighten their wallets and hunt for bargains in the coming months as household bills rise.”
Kingfisher’s numbers paint a picture of the waning DIY craze that started when people were stuck at home during the pandemic, with profits falling 30% and sales falling 4.1% year over year to £6. 8 billion in the first six months of this year. Instead of “nice to have” makeovers, customers are now piling on insulation to improve their leaky homes and help them cut rising utility bills, which will still double even with Liz Truss’ price freeze this fall. are from last year.
It will be a tough winter for both households and businesses.