A Grand Tour Of The Retail Sector

This sector is home to many well-known companies, and some not so well-known.

We turn our attention today to General Retailers on our tour of the sectors of the FTSE. It's one of the more populated sectors of the stock market, which is not really surprising -- general retail covers just about anything that can be bought or sold on the high street, and the competition is fierce.

The table below lists all of the General Retailers on the FTSE main list and the Alternative Investment Market (AIM) whose market value exceeds £50m.

Usually, AIM shares tend to be small companies, but we have one this time, in the form of the online fashion retailer, ASOS, whose meteoric rise has been a big success story in recent years.

But what of the leaders in the sector? Marks & Spencer, which has seen growth in fashion sales lately, and which held its AGM this week, won't really need any introduction for most people. Having been focused on turning round its business in recent years, M&S is in the process of a, not altogether uncontroversial, change in management.

Kingfisher might be less well known, as it does not trade under that name. But most people will know of its two major UK retail DIY outlets, B&Q and Screwfix. Though the DIY trade might be expected to be a bit cyclical, Kingfisher's profits have been growing over the past few years, possibly helped by people spiffing up their current homes rather than trying to move house, as financial markets collapsed around their ears. On a prospective P/E of around 11 the shares are promising a 3% dividend, if all goes according to plan.

Home Retail Group is another that doesn't usually spring to mind when we think of high street brands, but it's in a similar business to Kingfisher, owning the Homebase and Argos chains. Home Retail has had a poorer couple of years than Kingfisher, with profits falling a fifth in 2010. But a recovery is expected, and the depressed share price puts them on a P/E of under 10 with a 6% dividend on the cards if it can be maintained -- the dividend is expected to be covered by earnings, but not by much.

The rest of the sector covers all sorts of markets, including Inchcape and Halfords, both in the motoring business. Inchcape is a global distributor and retailer of motor vehicles, and is diversified into service, parts, finance and insurance. Halfords was recently proposed as a cheap, solid retailer, along with M&S and JD Sports Fashion, and it certainly appears to have added shareholder value with its ongoing integration of Nationwide Autocentres.

The rest? Well, they're many and varied, and investors will need to do their own individual research. If you have already done that and you have any favourites, please do tell us about them in the comments, below.

Previous Sector Analyses

• High Flyers And Big Guns
• A Powerful Sector
• House For Sale

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