Deutsche Bank analysts have lifted their outlook on Marks & Spencer, citing strong demand for its premium food and fashion lines, while downgrading Currys and Wickes as consumers curb discretionary spending. The split reflects a widening gap in UK retail resilience as inflation squeezes household budgets.

Deutsche Bank reaffirms Marks & Spencer amid inflation pressures

According to the bank’s latest note,M&S is positioned to “weather the current inflationary pressures” thanks to its dual‑track strength in food and apparel. The analysts highlight that premium food sales remain robust and that fashion collections continue to attract higher‑income shoppers,providing a buffer against the cost‑of‑living squeeze.

Currys and Wickes downgraded to sell and hold as big‑ticket spending stalls

Deutsche Bank moved B&M and Wickes to a “sell” rating and placed Currys and Dunelm on “hold”, citing vulnerability to reduced consumer spending on non‑essential eelctronics and home‑improvement goods . the report notes that these retailers depend heavily on larger, discretionary purchases that are the first to be cut when disposable income tightens.

Tesco and Pets at Home also praised for defensive positioning

The bank’s analysis also reaffirmed Tesco and Pets at Home, pointing to Tesco’s market‑share dominance and Pets at Home’s stable veterinary services as protective factors.. As the report states, “companies with strong brand loyalty, value propositions, and essential or treat‑based products are better equipped to sustain demand.”

Lower‑income households flagged as downside risk for the sector

Deutsche Bank warns that “downside risks” loom for lower‑income households, whose tighter budgets could deepen the split in consumer behaviour. This risk could exacerbate the downturn for retailers reliant on big‑ticket items, while premium‑focused chains like M&S may continue to benefit from higher‑spending shoppers.

Who will watch the retail split as the Bank of England holds rates?

Investors are urged to monitor how the Bank of England’s policy stance influences inflation trends , because the bank’s outlook suggests that defensive qualities and strategic positioning will be critical differentiators in the coming months.