Cheap U.K. Retail Stocks May Be Too Good to Be True

Some retail shares may not recover, says Old Mutual’s Murphy
Stock pickers cautious about Debenhams, Dixons Carphone, M&S

Shoppers passes a Gap Inc. fashion retail shop while walking along on Oxford Street in central London, U.K., on Tuesday, Nov. 7, 2017. U.K. retail sales fell the most in seven months in October, indicating continued caution among consumers just weeks before the crucial Christmas shopping season.Photographer: Luke MacGregor/Bloomberg

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By Lisa Pham

January 25, 2018 at 6:00 AM UTC

This article is for subscribers only.

Investors seeking to snap up bargains among slumping U.K. retail stocks had better beware that some discounts may be too good to be true.

Simon Murphy, a fund manager at Old Mutual Global Investors, says structural problems at several British retailers mean that although share prices have tumbled, they’re unlikely to recover. Traditional brick-and-mortar retailers have too much store space and continue to lose business to online competitors, he said.