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Marks & Spencer, Tesco, Debenhams, Primark and JD Sports lead flurry of Christmas trading news – business live Marks & Spencer, Tesco, Debenhams, Primark and JD Sports lead flurry of Christmas trading news – business live
(35 minutes later)
10.59am GMT
10:59
Still with the economy, and eurozone industrial production rose more sharply than expected in November.
Output climbed by 1.5% month on month compared to forecasts of a 0.5% increase. Year on year it rose 3.2%, much better than the 1.6% expected.
The October figures were revised upwards, with a 0.1% rise month on month compared to an earlier reported fall of 0.1%. Dennis de Jong, managing director at UFX.com, said:
After stuttering throughout the summer, industrial production in the eurozone bounced back with a vengeance in November, which will give the ECB serious grounds for confidence at this early stage in 2017.
The outlook remains weighed down by continued political uncertainty, but the recovery in the region is gathering some real momentum. Unemployment is falling, business confidence is up and the weak euro is a real boost for exporters.
Although Mario Draghi and his ECB colleagues are still faced with some very real political threats, the economy is standing up well in the face of adversity.
The ECB is due to announce its latest monetary policy deliberations next Thursday.
Back with the industrial production figures and Howard Archer, economist at IHS Markit, was also positive but warned of an uncertain outlook:
Even allowing for the fact that industrial production has been highly erratic, November’s jump reinforces our belief that Eurozone GDP growth could well have reached 0.5% quarter-on-quarter in the fourth quarter of 2016. This would be up from 0.3% in both the third and second quarters.
It appears that the Eurozone manufacturing sector carried decent momentum into 2017, and they will be helped by the very competitive euro...
Looking ahead, a concern for Eurozone manufacturers will be that mounting uncertainty over the coming months (particularly political) could cause business and consumers to be cautious in their major spending decisions, thereby constraining demand for capital goods and big-ticket consumer durable goods
It is also very possible that purchasing power for Eurozone consumers’ will become less favourable as inflation picks up, thereby weighing down on demand for big-ticket consumer durables.
In particular, an uncertain political environment could be increasingly problematic for Eurozone growth prospects over the coming months, especially given that the UK’s Brexit vote last June and November’s election of Donald Trump as US President fuels concern over potential political shocks. General elections are due 2017 in the Netherlands (in March), France (in April/May) and Germany (in September), while a 2017 election is very possible in Italy following Prime Minister Renzi’s early-December defeat in the referendum on constitutional reform which has led to his resignation.
And Capital Economics pointed out:
Nov's 1.5% m/m rise in euro-zone Ind. production was boosted by a huge gain of 16.3% in Ireland - a statistical quirk that may be reversed pic.twitter.com/bUsdq182Ii
10.47am GMT
10:47
German economy grows at fastest rate in five years
Good news for the eurozone as the Germany economy, the major driver of growth in the region, recorded its best performance for five years in 2016.
German GDP grew by 1.9% last year, up from 1.7% in 2015 and better than the expected 1.8% rise. The economy was boosted by strong domestic demand, compensating for sluggish demand for exports. ING economist Carsten Brzeski said the German economy remained an “island of happiness”, adding:
The German economy has once again defied several deep hits. Despite the stock market crash in China, Brexit, Turkey, Trump and Italy, the economy performed its best growth year since 2011. Strong domestic demand has shielded the German economy against most external risks.
And he said the biggest risk to future growth was complacency:
[2016] was a year in which the German economy proved to be more robust than many thought and in which the economy weathered a series of external risks extremely well, thanks to strong domestic demand. In fact, the often controversially discussed refugee crisis and the ECB’s ultra-loose monetary policy turned out to be an economic blessing, artificially extending the long, positive cycle of the economy. The year 2017 will in our view look very much like 2016, only with a bit less of everything. Domestic demand, ie construction and both private and public consumption, should remain the main growth drivers. The biggest risk for the economy is not Trump or political populism in the Eurozone but self-complacency. The economy urgently needs new impetus from new structural reforms and stronger public and private investment. It is very unlikely that it will get any of these before the elections.
UniCredit economist Andreas Rees was also positive:
The German economy remains a stronghold of continuity. With plus 1.9% in 2016, its growth performance was rock solid and even accelerated to its strongest pace in the last five years (2015: +1.7%; 2014: +1.6%). Once again, the major driver was domestic demand in the form of private and public consumer expenditures and not export activity. Imports were even outpacing exports last year. Taking a glimpse into 2017, the German economy remains fundamentally in good shape. The growth drivers will change somewhat, since there will be a (moderate) shift from domestic demand to stronger export activity. What can go wrong? It goes without saying that there are substantial political risks, especially from the US, which could have an (indirect) impact on German exports. Whether and how this will play out still remains to be seen. For 2017, we expect “only” GDP growth of 1.5%. Please note that the reason for the drop is NOT based on fundamentals and definitely not a reason to be worried. Instead, the lower number of working days is artificially weighing on the headline growth number (calendar-day adjusted growth in 2017: +1.8% after also +1.8% last year).
10.21am GMT10.21am GMT
10:2110:21
Pharma shares hit by Trump commentsPharma shares hit by Trump comments
Speaking of Donald Trump, one market moving comment in his press conference related to pharmaceutical companies.Speaking of Donald Trump, one market moving comment in his press conference related to pharmaceutical companies.
He said drugs companies were “getting away with murder” in the prices they charged and promised that would change. That sent US pharma stocks lower, and theat sentiment has carried over into Europe.He said drugs companies were “getting away with murder” in the prices they charged and promised that would change. That sent US pharma stocks lower, and theat sentiment has carried over into Europe.
So Shire, Hikma, GlaxoSmithKline and AstraZeneca have all seen their shares fall. Michael Hewson, chief market analyst at CMC Markets, said:So Shire, Hikma, GlaxoSmithKline and AstraZeneca have all seen their shares fall. Michael Hewson, chief market analyst at CMC Markets, said:
If pharmaceutical companies were hoping for an easier ride from President elect Donald Trump than Hillary Clinton they were quickly disabused of this notion last night when the President elect let rip at the industry’s pricing policies.If pharmaceutical companies were hoping for an easier ride from President elect Donald Trump than Hillary Clinton they were quickly disabused of this notion last night when the President elect let rip at the industry’s pricing policies.
Last year was notable for a number of stories related to price gouging including the Mylan story around the Epipen price hikes, and Valeant’s policy of buying older niche drugs and then hiking the prices aggressively, and the antipathy that resulted from these stories has made the industry an easy target for a President who may feel compelled to get some quick political wins.Last year was notable for a number of stories related to price gouging including the Mylan story around the Epipen price hikes, and Valeant’s policy of buying older niche drugs and then hiking the prices aggressively, and the antipathy that resulted from these stories has made the industry an easy target for a President who may feel compelled to get some quick political wins.
At a time when pharmaceutical companies were hoping for a more benign investment environment last night’s remarks were a reminder, if any were needed, as well as a warning to the sector and other sectors as well, of the President elects propensity to adopt a scatter gun approach to domestic policy.At a time when pharmaceutical companies were hoping for a more benign investment environment last night’s remarks were a reminder, if any were needed, as well as a warning to the sector and other sectors as well, of the President elects propensity to adopt a scatter gun approach to domestic policy.
Investors would do well to bear this in mind given that the recent stock market rally doesn’t appear to have factored this into their investment scenarios. The Trump Presidency is unlikely to be a one way bet for stock markets.Investors would do well to bear this in mind given that the recent stock market rally doesn’t appear to have factored this into their investment scenarios. The Trump Presidency is unlikely to be a one way bet for stock markets.
UpdatedUpdated
at 10.37am GMTat 10.37am GMT
10.16am GMT10.16am GMT
10:1610:16
A stronger pound is also taking some of the shine off the leading index.A stronger pound is also taking some of the shine off the leading index.
One of the driving factors behind the recent surge in the FTSE 100 to record levels has been the weakness of sterling, which benefits overseas earners and makes UK assets more attractive to international investors.One of the driving factors behind the recent surge in the FTSE 100 to record levels has been the weakness of sterling, which benefits overseas earners and makes UK assets more attractive to international investors.
But disappointment that president-elect Donald Trump - in his first press conference since July - failed to spell out details of his plans to boost the US economy with infrastructure spending and new tax measure has sent the dollar lower.But disappointment that president-elect Donald Trump - in his first press conference since July - failed to spell out details of his plans to boost the US economy with infrastructure spending and new tax measure has sent the dollar lower.
Against the US currency the pound has added 0.32% to $1.2252, although sterling is virtually flat against the euro at €1.1528.Against the US currency the pound has added 0.32% to $1.2252, although sterling is virtually flat against the euro at €1.1528.
10.12am GMT10.12am GMT
10:1210:12
The FTSE 100 has slipped back after its record breaking run of ten consecutive closing highs, and is currently down 0.22% at 7274.The FTSE 100 has slipped back after its record breaking run of ten consecutive closing highs, and is currently down 0.22% at 7274.
Retailers have received a mixed reception to their Christmas updates, with Marks & Spencer and JD Sports moving sharply higher, but Tesco, Primark owner Associated British Foods and AO World all disappointing investors.Retailers have received a mixed reception to their Christmas updates, with Marks & Spencer and JD Sports moving sharply higher, but Tesco, Primark owner Associated British Foods and AO World all disappointing investors.
9.40am GMT9.40am GMT
09:4009:40
Stockbrokers Shore Capital are extremely unamused that Tesco, M&S, Debenhams, ASOS et al all decided to release their results today in a “chaotic” splurge.Stockbrokers Shore Capital are extremely unamused that Tesco, M&S, Debenhams, ASOS et al all decided to release their results today in a “chaotic” splurge.
They say:They say:
The British retail trade has decided to make many market updates today.The British retail trade has decided to make many market updates today.
Such dis-coordination, to put it politely, does not serve shareholders and investors well. Investor relations executives should hold their respective heads in shame at the chaotic volume of information coming out today whilst seeking for a more balanced information flow in 2018.Such dis-coordination, to put it politely, does not serve shareholders and investors well. Investor relations executives should hold their respective heads in shame at the chaotic volume of information coming out today whilst seeking for a more balanced information flow in 2018.
UpdatedUpdated
at 9.45am GMTat 9.45am GMT
9.35am GMT9.35am GMT
09:3509:35
As feared, AO World’s cautious trading statement has gone down badly in the City.As feared, AO World’s cautious trading statement has gone down badly in the City.
Shares in the online electrical supplier have slumped by 8.7%, after it warned that the economic outlook is uncertain.Shares in the online electrical supplier have slumped by 8.7%, after it warned that the economic outlook is uncertain.
9.18am GMT9.18am GMT
09:1809:18
Conservative MP Margot James has applauded John Lewis and Marks & Spencer for their Christmas performance:Conservative MP Margot James has applauded John Lewis and Marks & Spencer for their Christmas performance:
Congratulations to directors and staff at John Lewis for their excellent Xmas season results, also to M&S - great to see clothing sales upCongratulations to directors and staff at John Lewis for their excellent Xmas season results, also to M&S - great to see clothing sales up
The Daily Mail’s Sabah Meddings tweets more details:The Daily Mail’s Sabah Meddings tweets more details:
Strong results from John Lewis come with a warning staff bonuses will be lower due to tough trading...Strong results from John Lewis come with a warning staff bonuses will be lower due to tough trading...
Waitrose will become 'more Waitrose' - says Sir Charlie MayfieldWaitrose will become 'more Waitrose' - says Sir Charlie Mayfield
9.03am GMT9.03am GMT
09:0309:03
John Lewis: Bonuses will be down this yearJohn Lewis: Bonuses will be down this year
As if we didn’t have enough to deal with, John Lewis has decided to put its Christmas trading figures out today too.As if we didn’t have enough to deal with, John Lewis has decided to put its Christmas trading figures out today too.
And it has warned its staff that their famous annual bonus is likely to be rather lower this year, even though sales and profits have risen.And it has warned its staff that their famous annual bonus is likely to be rather lower this year, even though sales and profits have risen.
Like-for-like sales at John Lewis stores rose by 2.7% in the six weeks to December 31, while Waitrose like-for-like sales were up 2.8%.Like-for-like sales at John Lewis stores rose by 2.7% in the six weeks to December 31, while Waitrose like-for-like sales were up 2.8%.
A successful promotional campaign, including one day only offers for Christmas staples, such as champagne and crackers, proved effective in building footfall in the pre-Christmas period.A successful promotional campaign, including one day only offers for Christmas staples, such as champagne and crackers, proved effective in building footfall in the pre-Christmas period.
Profits for the year to 28 January 2017 will probably be up on last year, thanks to lower pension charges. But JLP says that trading profits are under pressure, due to the boom in internet shopping and the fall in the pound.Profits for the year to 28 January 2017 will probably be up on last year, thanks to lower pension charges. But JLP says that trading profits are under pressure, due to the boom in internet shopping and the fall in the pound.
The most obvious of these changes is the channel shift from shops to online.The most obvious of these changes is the channel shift from shops to online.
The other major influence is pricing, where deflation continues in food and non-food, despite rising input costs as a result of weakness in the Sterling exchange rate.The other major influence is pricing, where deflation continues in food and non-food, despite rising input costs as a result of weakness in the Sterling exchange rate.
These factors are significant for the outlook where we expect both inflationary cost pressures and competition to intensify in the market as a whole.These factors are significant for the outlook where we expect both inflationary cost pressures and competition to intensify in the market as a whole.
The rate of retail market sales growth may slow and the rate of profit growth that is achievable will be affected by margin pressure.The rate of retail market sales growth may slow and the rate of profit growth that is achievable will be affected by margin pressure.
And staff are going to be hit in the pocket, when the bosses decide how much of the profits to share with them.And staff are going to be hit in the pocket, when the bosses decide how much of the profits to share with them.
The Partnership Board will decide on the level of Bonus in March, but, given the challenging market outlook and the importance of investment for the future, the Board expects that bonus is likely to be significantly lower than last year.The Partnership Board will decide on the level of Bonus in March, but, given the challenging market outlook and the importance of investment for the future, the Board expects that bonus is likely to be significantly lower than last year.
UpdatedUpdated
at 9.15am GMTat 9.15am GMT
8.41am GMT8.41am GMT
08:4108:41
Boom! Shares in JD Sports have hit a new all-time high, romping up by 6% to 346p.Boom! Shares in JD Sports have hit a new all-time high, romping up by 6% to 346p.
That puts it top of the FTSE 250 index of medium-sized companies.That puts it top of the FTSE 250 index of medium-sized companies.
Traders are applauding the firm’s 10% jump in sales over ChristmasTraders are applauding the firm’s 10% jump in sales over Christmas
8.38am GMT8.38am GMT
08:3808:38
And finally, here are those smaller retailers...And finally, here are those smaller retailers...
Baby goods retailer Mothercare has reported a 1% jump in like-for-like sales in the last quarter, driven by online sales. More here.Baby goods retailer Mothercare has reported a 1% jump in like-for-like sales in the last quarter, driven by online sales. More here.
Fashion chain SuperGroup says it had a good half-year, with revenues rising to £334.0m, from £254.7m. More here.Fashion chain SuperGroup says it had a good half-year, with revenues rising to £334.0m, from £254.7m. More here.
Top hat and tails purveyor Moss Bros has posted a 6% jump in like-for-like sales. CEO Brian Brick says “ongoing investment in new and refitted stores” is paying off. More here.Top hat and tails purveyor Moss Bros has posted a 6% jump in like-for-like sales. CEO Brian Brick says “ongoing investment in new and refitted stores” is paying off. More here.
Dunelm, the homewares firm, had a solid but unspectacular festive period with like-for-like sales up 0.2%. More here.Dunelm, the homewares firm, had a solid but unspectacular festive period with like-for-like sales up 0.2%. More here.
No drama at food wholesale chain Booker Group; it’s on track to hit City forecasts this year.No drama at food wholesale chain Booker Group; it’s on track to hit City forecasts this year.
8.26am GMT8.26am GMT
08:2608:26
ASOS boosted by slide in sterling.ASOS boosted by slide in sterling.
Online fashion chain ASOS has reported bumper sales growth over Christmas, up 18% in the UK.Online fashion chain ASOS has reported bumper sales growth over Christmas, up 18% in the UK.
International sales surged by 52%, as ASOS benefits from the weak pound, and the company is now planning to upgrade its systems and processes to handle higher demand.International sales surged by 52%, as ASOS benefits from the weak pound, and the company is now planning to upgrade its systems and processes to handle higher demand.
CEO Nick Beighton says:CEO Nick Beighton says:
“With sales for the year now expected to be up by c.25 percent to 30 percent, we’re accelerating our infrastructure investment to handle that growth.”“With sales for the year now expected to be up by c.25 percent to 30 percent, we’re accelerating our infrastructure investment to handle that growth.”
Asos posted strong results for the four months to 31 December. Total retail sales rose 36% to £605.7m, and revenues also rose 36%.Asos posted strong results for the four months to 31 December. Total retail sales rose 36% to £605.7m, and revenues also rose 36%.
8.20am GMT8.20am GMT
08:2008:20
Tesco’s shares have fallen by 2.3% in early trading.Tesco’s shares have fallen by 2.3% in early trading.
That making it the worst-performing member of the FTSE 100, even though it grew sales by 0.7% over Christmas.That making it the worst-performing member of the FTSE 100, even though it grew sales by 0.7% over Christmas.
Tesco is holding a conference call now, and saying it’s not seen any change in UK consumer spending since the EU referendum.Tesco is holding a conference call now, and saying it’s not seen any change in UK consumer spending since the EU referendum.
John Ibbotson of Retail Vision argues that Tesco’s results are encouraging:John Ibbotson of Retail Vision argues that Tesco’s results are encouraging:
“Tesco’s revival continues apace, with a strong Christmas trading period and third quarter.”More ominously for its competitors, Tesco has managed to increase its market share in a period of cut-throat competition.“Tesco’s revival continues apace, with a strong Christmas trading period and third quarter.”More ominously for its competitors, Tesco has managed to increase its market share in a period of cut-throat competition.
8.07am GMT8.07am GMT
08:0708:07
Shares in M&S have jumped by almost 5% at the start of trading, as investors cheer its best festive performance for six years.Shares in M&S have jumped by almost 5% at the start of trading, as investors cheer its best festive performance for six years.
That’s makes it the best-performing share on the FTSE 100.That’s makes it the best-performing share on the FTSE 100.
My colleague Zoe Wood explains:My colleague Zoe Wood explains:
Marks & Spencer has ended the long-running slump in sales at is clothing arm with its best Christmas performance for six years.Marks & Spencer has ended the long-running slump in sales at is clothing arm with its best Christmas performance for six years.
The retailer said like-for-like clothing sales were up by 2.3% in the 13 weeks to 31 December. This time last year clothing sales had slumped by nearly 6%.The retailer said like-for-like clothing sales were up by 2.3% in the 13 weeks to 31 December. This time last year clothing sales had slumped by nearly 6%.
M&S chief executive Steve Rowe said “better ranges, better availability and better prices” had helped it improve its performance in a difficult marketplace.M&S chief executive Steve Rowe said “better ranges, better availability and better prices” had helped it improve its performance in a difficult marketplace.
To win back shoppers, Rowe has already cut clothing prices and promised to pay more attention to its most loyal group of shoppers – fiftysomething women he has dubbed “Mrs M&S”. He also slashed the number of promotions run by the store.To win back shoppers, Rowe has already cut clothing prices and promised to pay more attention to its most loyal group of shoppers – fiftysomething women he has dubbed “Mrs M&S”. He also slashed the number of promotions run by the store.
More here:More here:
UpdatedUpdated
at 8.14am GMTat 8.14am GMT