Deep discounts across the retail sector in the run-up to Black Friday (24 Nov) look set to trigger a further flurry of profit warnings in January, if not before Christmas.

The nation’s shopkeepers are slashing prices to drive custom at a time when consumer incomes are being squeezed. Marks & Spencer (MKS) CEO Steve Rowe is on record as believing the recent interest rate rise ‘might have more of a psychological impact than people think’ on consumer spending.

The likes of Debenhams (DEB), Mothercare (MTC), Morrisons (MRW), Dixons Carphone (DC.) and the aforementioned Marks & Spencer all languish on share price lows, showing investors are pricing in the risk of a slew of post-Christmas earnings alerts.

The Office for National Statistics (ONS) reports (16 Nov) a 0.3% fall in retail sales figures for October – while impacted by unseasonal weather and a tough prior year comparative, the data confirm the squeeze on household incomes continues.

As has been the case in recent years, the forthcoming cyber weekend and broader festive period should boost the takings of structurally-advantaged online players, although online industry body IMRG predicts the expected £7bn that will be spent over the seven days of Black Friday week will also require a record level of product returns to be processed, yet another cost headache the sector could do without.

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