UK & EU durables: premium vs value, rates, margins

This article is based on a recent LinkedIn Live event hosted by Marvin Labs. The discussion featured Alex Hoffmann (CEO and founder, Marvin Labs) and Sristi Shah (MSc Investment and Finance, Queen Mary University of London). The panel focused on UK and European durables retailers as earnings season gets underway, with a practical look at premium versus value positioning, supply chain frictions, interest rate sensitivity, guidance quality, and how AI can help analysts work faster. Watch the full session for the complete discussion.

Takeaway 1: Value is gaining share, premium is holding up, and the middle is squeezed

The panel’s view was clear: value formats are winning trade‑down, premium remains resilient in select categories, and mid‑market propositions face the most pressure.

• Value: Formats like B&M and Primark continue to benefit as households protect monthly budgets. B&M has emphasized scale and direct sourcing advantages in replenishment‑heavy categories in recent updates B&M investor relations. Primark’s value proposition remains a tailwind within Associated British Foods’ retail segment ABF investors.
• Premium: Demand for branded sneakers and premium apparel has been more resilient among less rate‑sensitive consumers, supporting retailers like JD Sports Fashion JD Sports investor relations.
• Mid‑market: The panel expects continued hollowing out of the middle as propositions that are neither low‑price nor clearly premium struggle to justify spend.

Consumers are not willing to trade down on quality, but willing to trade down on quantity.

Marks & Spencer is a useful reference point. Management has highlighted that customers are still trading up to quality where they perceive value, with ongoing strength in own‑brand ranges M&S investors.

Takeaway 2: Supply chains are no longer in crisis, but frictions still compress margins

The discussion drew a line between the acute shortages of 2020–2021 and today’s environment. Freight, energy, and warehousing costs have eased from peaks but remain above pre‑pandemic levels, keeping pressure on gross margins and inventory turns. Container shipping indices still show volatility relative to pre‑2020 baselines Drewry World Container Index.

Durables are more exposed than staples due to longer, more global supply networks. The panel also noted that companies rarely detail supply chain redesigns unless the moves are transformational. Nike’s multi‑year factory and sourcing rebalancing in Asia is a notable exception disclosed in primary documents NIKE 10‑K (supply chain and sourcing).

For UK food retail, localized sourcing has provided more resilience, but that advantage translates less directly to durables. Across durables, scale players with diversified sourcing and stronger logistics contracts have more room to mitigate volatility.

Takeaway 3: Interest rates are reshaping baskets and delaying big‑ticket spend

Higher borrowing costs filter into budgets through mortgage resets and more expensive consumer credit, curbing discretionary purchases. UK household sentiment remains fragile even as headline inflation has cooled, which aligns with recent readings on the Bank Rate, consumer confidence and price indices.

Durables are among the first categories where purchases can be deferred. That said, the panel called out utility‑driven demand as a support. Currys cited weather‑linked categories and interest in AI‑enabled PCs as offsets in recent communications Currys investors.

Takeaway 4: Earnings season watchlist and where expectations may be mis‑priced

Names the panel discussed and how we are thinking about setup into prints:

• JD Sports Fashion and Next: Premium and branded apparel demand has held up better than the mid‑market. Execution on mix and inventory will be in focus JD Sports IR Next IR.
• Marks & Spencer: Stronger food performance and ongoing clothing modernization, with own‑brand resilience a support. Watch for margin delivery and cash conversion M&S IR.
• Dunelm: Homewares remain rate‑sensitive and linked to housing transactions. Sales leverage on fixed costs is the swing factor Dunelm IR.
• Frasers Group: Portfolio complexity and asset valuations warrant close reading of segment detail and working capital Frasers Group IR.
• B&M: Value positioning, sourcing scale, and cost discipline are key strengths in the current environment B&M IR.
• WH Smith: Travel‑exposed categories depend on passenger volumes and impulse spend. Traffic and conversion metrics drive the debate WH Smith IR.

For Primark, the panel corrected an in‑discussion slip: Primark is owned by Associated British Foods (ABF), not “ADF” ABF investors.

Takeaway 5: Guidance quality is a real signal to the market

Executives who provide specific, time‑bound, and internally consistent guidance tend to earn more credibility with investors. The panel emphasized two practical screens:

• Specificity: Clear metrics, time frames, and quantified actions beat generic statements about pricing, marketing, or supply chains.
• Discipline: Forward‑looking statements delivered in prepared remarks and reinforced across disclosures are more reliable than off‑the‑cuff comments.

The numbers matter, but the narrative matters even more.

This is visible in share‑price reactions on results days. Companies that pair delivery with coherent guidance often see cleaner receptions, while short‑term beats paired with cautious guidance can trade down as expectations reset.

Takeaway 6: How analysts are using AI to move faster this season

The panel closed with practical workflow ideas. Analysts are using automation to monitor guidance statements across primary documents, track tariff references as they appear in results, and compress call preparation time.

A useful framing for AI in equity research is the division between interactive and asynchronous work. An analyst can use chat such as Marvin Labs' AI Analyst Chat to spar with a knowledgeable “colleague” that has ingested a company’s primary documents, then hand structured monitoring or drafting tasks to Deep Research Agents that run in the background and report back. The aim is not to replace judgment, but to reduce cycle times on reading, cross‑checking, and building consistent scenarios.

Why This Matters for Investors

Watch the full video to hear the complete discussion and perspectives from the panel.