The companies benefiting from our Christmas shopping

The countdown to Christmas has officially started. There’s plenty of holiday cheer among shoppers this year, who will spend an estimated £24.1bn online between 1 November and 31 December*. Consumer enthusiasm is, in part, fuelled by the increasing use of flexible payment methods, while e-commerce is expected to grow by nearly 3%* over the period.

But who benefits from our holiday spending? Here we take a look at the funds that are holding potential festive winners ahead of the all-important annual shopping bonanza.

The ease of online shopping

Shopping may never have been this easy. No more braving the crowds (and the weather), but instead a comfy sofa, central heating and a box-set playing in the background.

Amazon is often the first name that comes to mind for online retailers and is the go-to website for millions of shoppers. In 2022, over 30% of online shoppers in the US planned on buying at least half of their holiday gifts on Amazon**. It’s also the fifth largest company in the world*** – the biggest retailer and e-commerce player. One of the largest holdings in CT Global Focus****, which is a concentrated, high conviction portfolio of best ideas.

eBay, a holding in Lazard Global Equity Franchise****, is another popular e-commerce giant, boasting 132 million active buyers across the world, and offers a dizzying array of items for sale, with everything from fashion to electrical goods, and power tools to vehicles. It also benefits from sellers flogging their unwanted gifts after Christmas.

Gifts for the whole family

Next, the British clothing, footwear and home products retailer sells online as well as through hundreds of outlets. In a recent third quarter trading update, the company increased full year profit guidance before tax by £10m to £885m^. Despite over 500 stores in the UK alone, Next reported almost 5% increase of online sales compared to last year^, partly down to its impressive online catalogue.

It’s a top holding in the Artemis Income fund****, which has been a stalwart of the UK equity income sector for two decades. This portfolio is a flexible, high-conviction collection of UK stocks, targeting a rising income and capital gain.

For shoppers looking for something special, Danish jewellery brand Pandora is a popular choice. Pandora is the third largest holding in the Liontrust European Dynamic fund****, which is managed by James Inglis-Jones and Samantha Gleave. The brand, which designs, manufactures and markets its products in more than 100 countries, is a popular destination for Christmas shoppers.

Finally, Louis Vuitton luggage may not be under everyone’s Christmas tree this year, but it’s been a strong year for the luxury retailers. LVMH, which owns Louis Vuitton, alongside Christian Dior, Moët & Chandon and jewelers Bulgari and Tiffany, became the first European company to hit $500bn^^ in June this year. LVMH, Hermes and Pandora are all top ten holdings for the BlackRock European Dynamic fund. If you can’t own the latest ‘it’ bag, you can at least own the company that makes it.

Making a Christmas feast

Of course, it’s not just presents that are bought in the run up to Christmas. Families will also splash out on food and drink. It is an important period for supermarkets, contributing a significant chunk of their annual revenues. Last year, Tesco was a key beneficiary of the move away from higher-end shops, and it will be hoping to repeat the trick this year as inflation bites^^^.

Its chief executive, Ken Murphy, recently declared: “We are committed to doing everything we can to drive down food bills and Tesco is now consistently the cheapest full-line grocer.”

Tesco is one of the largest holdings in Rathbone UK Opportunities****, which has been managed by Alexandra Jackson since 2014. This is a flexible fund that aims to deliver a greater total return than the FTSE All-Share Index, after fees, over any five year period.

Nevertheless, some shoppers are still pushing the boat out for Christmas. Shoppers made 25,000 Google searches for ‘M&S Christmas food’, which was more than double those for its closest rival and was named most popular supermarket for Christmas food in 2022. The group has also been turning round its struggling clothing division and has been rewarded with a return to the FTSE 100^^^^. M&S is a holding in AXA Framlington UK Mid Cap**** fund.

Paying for it all

Sadly, it all needs to be paid for. Other potential winners over the upcoming festive period include Visa, the global payments provider. This company’s technology, which enables the exchange of digital currency, rather than cash, is used by individuals, businesses and governments in more than 200 countries.

It features in the top holdings in Morgan Stanley Global Brands****, which invests in high quality companies with defendable and visible future earnings. It’s also an important holding in Jupiter Financial Opportunities, where it sits alongside a range of financial companies including stock exchanges, online payment companies and investment banks****.

*Source: Adobe, 8 November 2023
**Source: Statista, 17 November 2023
***Source: Statista, 30 August 2023
****Source: fund factsheet, 31 October 2023
^Source: NEXT, third quarter trading statement, 1 November 2023
^^Source: Global Finance, 5 June 2023
^^^Source: Marketing Week, 12 January 2023
^^^^Source: Just Style, 23 August 2023

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and fund managers and do not constitute financial advice.