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MARKET REPORT: Boom in online shopping here to stay

MARKET REPORT: Boom in online shopping since Covid-19 took hold is here to stay – that is verdict of bosses at warehouse giant Segro

The boom in online shopping since Covid-19 took hold is here to stay. 

That is the verdict of bosses at warehouse giant Segro after even the most loyal High Street shoppers were converted to ordering online last year when the pandemic shut all but essential shops for months on end. 

Although there has been debate about how long this trend will last, Segro boss David Sleath believes spending habits have ‘potentially changed irrevocably’. 

Crucially, this is what Segro has been hearing from its customers – which range from behemoths such as Amazon to relative tiddlers like Brompton Bicycle. 

As the company said in its full-year results, clients ‘certainly do not expect there to be a significant retreat and are already preparing to adapt their businesses to respond to levels of online sales that are well ahead of previous expectations’. Profits at the group, which owns or manages 95msqft of space, rose by 11 per cent to £297m last year. Revenue fell marginally, from £433m to £432m, which was mainly driven by fewer property sales. It will reward shareholders with a bigger dividend payout, which will increase by 7 per cent to 22.1p. Cheered by the numbers, Segro shareholders sent the stock up 1.5 per cent, or 14.6p, to 977.4p. 

It is a year since markets began a descent into what quickly became a freefall as coronavirus was acknowledged to be spreading around the globe. 

Traders reacted faster than most policy makers – with huge sell-offs starting on February 21 even though lockdowns took weeks more to materialise. 

Virtually all sectors were hit at first but what later emerged were two distinct camps of Covid ‘winners’ and ‘losers’ – with the likes of Ocado (down 0.4 per cent, or 9p, to 2559p), Just Eat (down 0.4 per cent, or 32p, to 7508p) and AO World (up 2 per cent, or 6p, to 301p) soaring while heavyweights such as Rolls-Royce (up 5.7 per cent, or 5.32p, to 98.66p), Shell (up 0.7 per cent, or 9.2p, to 1340.4p) and British Airways-owner IAG (up 5.1 per cent, or 8.05p, to 165.75p) languished. 

Markets seesawed throughout 2020, but if you look at the FTSE250 now you might struggle to believe it dipped below 13000 last March. The mid-cap index closed at 21035.96 yesterday, not too far from its pre-Covid peak of 22108. The FTSE 100 has taken more of a toll. It stands at 6624.02 compared with 7457 a year ago. 

Chilean copper miner Antofagasta sped to the top of the Footsie leaderboard yesterday – rising 7.2 per cent, or 123p, to 1838p – as prices of the metal hit a ten-year high of $8,930 a tonne on hopes of a global economic rebound and huge investment into green technologies. 

Rising commodity prices have prompted a wider rally among mining stocks and this week saw BHP (up 1.9 per cent, or 42.5p, to 2277.5p), Glencore (up 4.1 per cent, or 11.8p, to 300.15p) and Rio Tinto (up 1.9 per cent, or 117p, to 6352p) all promised bumper dividends on the back of the boom. 

Elsewhere, Marie Claire and Country Life publisher Future raised its profits forecasts after readers flocked to its sites in the run-up to Christmas. 

Digital advertising sales were particularly strong around Black Friday and Christmas, it said in a trading update for the four months to January 31. Shares rose 6 per cent early on but lost ground to close up 1.1 per cent, or 20p, to 1922p. 

WH Smith and Asos climbed (up 2.2 per cent, or 36p, to 1684p and 1.8 per cent, or 102p, to 5772p respectively) as they were tipped to be among a wide-ranging group of stocks best placed to ‘play the UK recovery’ by analysts at Peel Hunt. 

These are all stocks, brokers said, that could be expected to see their stocks rise by 25 per cent over the next three to six months if the economy begins to rebound.