UK retail sales slide as shoppers buy less food after summer splurge - business live
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Version 6 of 14. Overnight, the US found a new way to hurt Chinese companies. The White House said it was pulling out of a United Nations treaty that offered low rates for foreign postal deliveries of small packages in the US. That could make it much pricier for Chinese firms to send goods to America. Stephen Innes of trading firm OANDA says this helped drive Chinese stocks down to a four-year low today: Fragile doesn’t describe just how delicate Asia investor sentiment is as any sliver of optimism from US earnings gave way to that reality that trade tension and geopolitical unrest continues to gurgle... To make matters worse, President Trump has found in the US postal service, a way to cripple China e-commerce which sent mainland equities into the tank. Britain’s pub industry is fighting its own battle against rising taxes, which it blames for forcing locals to close. Six publicans, including former model Jodie Kidd, have dropped off a petition at Downing Street today, calling for a cut in beer duty in this month’s budget. Organised by the “Long Live the Local” campaign, it warns that 12% of pubs could close in the next five years unless the chancellor cuts the duty (currently three times the EU average). Kidd, who runs The Half Moon, Kirdford, says another rise in beer duty would cripple the industry: “Local pubs like my own bring people together and are at the heart of communities. However, mounting financial pressures mean that for many it is already a struggle just to keep their doors open. “I am at Downing Street today to deliver the Long Live the Local petition because, along with 105,000 other people, I believe the Chancellor must act now to protect our local pubs. Chancellor Philip Hammond is currently scrambling around, trying to find ways to raise revenue so he can meet Theresa May’s pledge to end austerity. So he may not be amenable to cutting the levy. However, pubs could certainly use some help - with supermarkets under-cutting them on price, and an increasing number of young people shunning alcohol. Heads-up for UK travellers: Cypriot airline Cobalt cancelled all its flights and indefinitely suspended operations, after failing to agree a new funding package. So if you were due to fly Cobalt from, say, Heathrow, Stansted, Gatwick and Manchester, I’m afraid there’s no point heading to the airport. More here: Domino’s Pizza hasn’t been caught up in the retail slowdown. The fast food chain has reported a 6.1% jump in sales in the UK and Ireland in July-September. David Wild, Chief Executive Officer, says the sizzling summer weather didn’t help (is it ever too hot for pizza, though?!) “Our businesses continue to trade well, despite the evident uncertainty among UK consumers, and hot weather across Europe for much of the quarter. Shares have jumped 7.5%, after Domino’s reiterated its profit guidance and announced a new £25m share buyback programme. Here’s our economics editor Larry Elliott on today’s retail sales figures: A strong summer for Britain’s retailers came to an abrupt end in September as weaker demand for food dragged down spending overall. The latest snapshot of spending from the Office for National Statistics showed that the volume of sales for shops and online businesses dropped by 0.8% – a bigger monthly fall than analysts had been expecting. September’s fall was not enough to outweigh rising activity in July and August, leaving sales for the quarter – a better guide to the underlying trend than one month’s data – up by 1.2%. Although consumers have only recently started to see their wages rise faster than prices, the ONS said the quantity of goods bought last month was 3% up on the same month a year earlier. All sectors apart from department stores, which underwent the collapse and partial rescue of House of Fraser in the past year, achieved growth. More here: Andrew Westbrook, head of retail at audit, tax and consulting firm RSM, reckons some retailers have been slashing prices, to shift stocks: There continue to be signs of distress on the high street, with deep discounting evident in some stores. The big rise in the sales of watches and jewellery over the last three months may be linked to discounting on big ticket items in an attempt to reduce stock levels. For many retailers, the run-up to the all-important Christmas season when stock can be converted to cash can’t come soon enough. This chart shows how retail sales growth has been levelling off recently (the blue line, which gives a better picture than the more volatile monthly stats): Ian Gilmartin, Head of Retail & Wholesale at Barclays Corporate Banking, says UK retailers are in a gruelling scrap: “It’s still tough out there for the UK’s retailers, so solid 3% growth compared with last September is welcome news, despite being slightly below expectations. Every sale continues to be hard-won and retailers are having to find creative ways to lure customers through their doors and onto their websites, but it seems from today’s data that they are persuading the public to keep spending. Although the dip in food sales from August is eye-catching, it was expected given the exceptional performance achieved over the summer and shouldn’t cause undue concern. He also singles out Brexit as a key worry: Any growth is significant given the plethora of challenges facing retailers – they are being hit from all sides, with business rates, the continued weakness of sterling and persisting uncertainty around Brexit combining to thwart investment and push up costs. Retail CEOs will be hoping to see some white smoke from Westminster and Brussels as soon as possible, and for solid assurances that they will be able to maintain their existing supply chains and frictionless trading arrangements with EU partners and consumers. Here’s Channel 4’s Helia Ebrahimi on the retail sales figures: High Street retail sales show a “stark slowdown” dropping 0.8% fr August - as summer parties give way to a hangover Autumn Food down 1.5%,steepest fall in 3yrsStrong growth in jewellery: some people annoyingly efficient at Xmas shopping or perhaps stockpiling for brexit? Today’s report also shows the impact of inflation, particularly at petrol stations where fuel is a lot pricier than a year ago: The sharp drop in retail sales last month shows that consumers are being squeezed, argues Emma-Lou Montgomery, associate director for Personal Investing at Fidelity International. She explains: “Today’s UK retail sales numbers confirm what we all fear about the state of the high street, with the latest figures showing a decline in sales of 0.8% in September compared to August 2018. The drop in sales in September is a reflection not only of clouds starting to form in the sky, but also our pockets. Food stores were the largest fallers contributing to this decline, with sales falling by 0.6%. Uncertainty over Britain’s exit from the EU is one factor, she adds: “While some retailers may be pinning their hopes on the recent news that consumers are likely to see a boost to their pay packets after this week’s data revealed that our earnings growth is currently outstripping inflation, UK consumers are unlikely to be splashing out just yet given the current climate of uncertainty around the Brexit negotiations. Unlike most common colds we are suffering at this time of year; UK households are still unable to shake off the prolonged symptoms of inflation and poor wage growth since the Brexit vote. With no breakthrough at last night’s EU leaders’ meeting, and mounting political pressure at home, that uncertainty hasn’t lifted yet.... |