Early Christmas shopping hits December sales

ECONOMY
Early Christmas shopping hits December sales

What’s going on?
Data released on Friday revealed that December saw the biggest monthly drop in retail sales on record driven by early Christmas shopping and Omicron fears on the high street.

Why is this important?

Retail sales fell 3.7% in December from November, more than the 0.6% expected by economists and the biggest drop since January 2021.

November numbers were particularly strong and supported the notion that Brits were early festive shoppers last year.

The month-on-month drop was also the biggest since records begun in 1996. Physical store sales fell 7% for non-food retailers and 1% for grocers.

The slowdown in shopping in the run up to Christmas came amid fears of the Omicron variant of Covid and the instigation of Plan B restrictions, both of which kept consumers away from the high street.
 

STOCKS
Have “stay at home” stocks had their day?

2020 was a knockout year for companies that helped us live, work and play at home during the pandemic but 2022 could spell the end of their good fortune.

At the end of last week two of the biggest lockdown winners, Netflix and Peloton, lost around 20% of their stock market value on the back of disappointing growth news.

Netflix’s shares doubled during the pandemic as it added 36m subscribers in 2020, but growth slowed last year when it only increased by 18m. The streaming giant said it expects to acquire 2.5m subscribers in the first three months of this year, way less than the 6m forecast by the market and compared to the 4m in the same period last year.

Peloton’s shares skyrocketed by 600% in 2020 but on Thursday the company confirmed that it was assessing the size of its workforce as it cut its 2022 revenue forecast by $1bn.

Other 2020 darlings like virtual document signing platform DocuSign and video call app Zoom are also suffering from a fall in investor popularity.

As economies reopen and life gradually returns to some sort of normality, it’s not surprising that these companies are struggling to keep growing the same way they did during the pandemic. The real surprise is just how quickly they have come back down to earth.

So where are investors putting their money in 2022? Sectors that took a beating during Covid are experiencing a resurgence. Energy stocks for example, have gained more than 10% this year, one of the best performers.