U.K. Retailers Slide as Updates Show Lingering Impact of Virus

(Bloomberg) -- U.K. retail stocks slid Thursday after a raft of subdued updates from bricks-and-mortar heavyweights that highlighted the lingering impact of the Covid-19 pandemic and cost inflation.

Shares of Marks & Spencer Group Plc, Tesco Plc and Halfords Group Plc all fell as analysts were left disappointed over recent sales or outlooks, while Card Factory Plc tumbled the most in seven months as it warned higher costs are set to cut profits.

The FTSE 350 Retailers Index lost as much as 1.4% versus a 0.3% decline for the All-Share benchmark. The retail gauge had risen in recent months amid hopes that the omicron strain would not be harmful enough to force the British government into harsh restrictions like those that slammed sales during earlier waves of the virus. 

However, Thursday’s updates suggest the new strain is still causing damage. “The omicron impact seen in December shows that the challenges associated with Covid-19 are still present,” Halfords said in its statement.

Halfords was down 3.3% at 9 a.m. in London, while M&S lost 5.9% and Tesco slipped 1.8%. Card Factory dropped 12%.

Card Factory cited the increasing cost of freight, utilities and staff wages for its margin concerns. Despite price rises and efficiency efforts, “the pressures will not be fully offset, resulting in lower profits than previously anticipated,” the company said. 

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