In the first part of the 2010s, when the billionaire Mike Ashley and his retail creation Sports Direct appeared to be knocking out every opponent that dared to pick a fight, the tycoon gave a memorably bullish performance in front of City analysts.
At a presentation in July 2011, as the rival JJB Sports was on the verge of being counted out, Ashley bragged: “I’ll finish off JJB first and then I’ll move on to JD.”
History so far shows Ashley’s prediction to be half-right: JJB was carried off on a stretcher in 2012; however, not only did JD Sports decide to take Ashley on, it won easily on points – at least judging by the scorecards of total investor returns at the close of the decade.
Partly, this result was down to blows landed on Sports Direct elsewhere, which resulted in Ashley’s firm being relegated from the FTSE 100 in 2016.
However, while Sports Direct has struggled, JD Sports has ended the decade as the current FTSE 100 company that has rewarded its investors most over the past 10 years, with £1,000 invested in JD Sports in January 2010 now worth £32,700, thanks to share price rises and dividends. It is fair to say that Ashley was not the only one who did not see that coming.
In fact, JD Sports, along with eight of the decade’s other top 10 performers who ended 2019 in the FTSE 100, were not even in London’s blue chip index at the beginning of the decade.
Russ Mould, the investment director at AJ Bell, the stockbroker that compiled the figures, said: “Only one of them was in the FTSE 100 on 1 January 2010. That was the London Stock Exchange [Group] and even that did not enjoy an unbroken run as a member of the index as it was demoted in summer 2010 and only rejoined in spring 2013.
“In other words, if you are looking for the really big winners, you are probably better off by starting to look in the FTSE 250. This harks back to [1960s and 70s investor] Jim Slater’s assertion that ‘elephants don’t gallop’ – meaning that the established giants of the FTSE 100 simply can’t grow fast enough to necessarily generate these sorts of meteoric returns.”
The flipside of Slater’s point can be seen by studying a separate list of the most valuable shares in the FTSE 100 at the beginning and end of the 2010s.
Only two names have dropped out of the list: BG Group, which was acquired by Royal Dutch Shell in 2016, and Vodafone, which in 2014 sold its stake in its American subsidiary Verizon Wireless and then handed the £18bn dividend back to shareholders.
Tesco was the worst-performing FTSE 100 share over the past decade, giving investors a negative total return of 21.6%, according to the AJ Bell research. The retailer suffered a shocking decade that included three chief executives and numerous profit warnings as well as shelling out £235m to settle investigations by the Serious Fraud Office and Financial Conduct Authority into the 2014 accounting scandal.
While Tesco’s bottom-of-the-table performance may have been partially self-inflicted, the company could also point to general sector issues, as the German discounters Aldi and Lidl increased their influence during the decade.
The rival supermarkets Sainsbury’s (which gave investors a 12.9% total return in the past 10 years) and Morrisons (+9.1%) were also in the top 10 of FTSE 100 worst performers. During that time when those two grocers produced those tiny shareholder returns, the FTSE 100 rose by 40% and gave a total return to shareholders of 104%.
The banks also all largely seemed to have poor decades, perhaps for obvious reasons, with Royal Bank of Scotland (total returns minus 8.5%), Barclays (minus 8.8%) and Standard Chartered (minus 17.9%) all suffering.
Energy stocks also gave investors a miserable 10 years. They were booming as we entered the last decade., with the consensus view that economic growth in China would carry share prices higher still.
As is often the case, that consensus proved to be horribly wrong. BP was among the worst-performing FTSE 100 shares with a total return of only 19.2%, while in the FTSE 250 oil stocks such as Premier Oil (total returns down 60.8%), Cairn Energy (minus 45.6%) and Tullow Oil (where returns slumped by 89.9%) dominated the index’s laggards. Meanwhile, oil services and equipment providers such as Petrofac (minus 28.3%) hardly performed much better. During the decade the FTSE 250 rose by 135% and gave a total shareholder returns of 209%.
Still, consensus being wrong does not mean gloom for all investors because another retailer also showed how you can make stellar returns despite a decade of challenges and woe on the UK high street. Games Workshop returned a magical 2570% to its shareholders since January 2010, as demand for its tabletop war games has swelled.
AJ Bell’s Mould said: “[Games Workshop] also shows how retail can still work, if you have the right products for your customers at the right price point and provide them in the right channel formats. The company looks after a well-defined community and does it very, very well.”