Pension shortfalls damage food retailers

Professional Adviser
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In August 2002, the European food sector hit a 30% P/E premium to the European market, the biggest f...

In August 2002, the European food sector hit a 30% P/E premium to the European market, the biggest for a decade, but has since come crashing back to earth. It seems the high beta rally in the fourth quarter of 2002 has continued into the first quarter of 2003, strange given that the sector is underperforming a falling market. This has resulted in the 30% premium being eroded to less than 5%. We think this is unjustified given that the sector fundamentals have arguably improved in the intervening period. While external factors like foreign exchange, higher commodity pricing and a tou...

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