(Alliance News) - UK retail sales rebounded in December after November's lockdown, figures from the Office for National Statistics showed on Friday, though still undershot market expectations.
Further, the ONS said 2020 overall saw the largest year-on-year fall in retail sales on record.
The latest bad news for the retail sector came after FTSE 100 fashion and homewares retailer Next decided against coming to the rescue of Philip Green's failed Arcadia retail empire.
UK retail sales increased 0.3% month-on-month in December - rebounding from a 4.1% slide in November - which resulted in an increase of 2.7% when compared with February's pre-pandemic level. Market consensus, according to FXStreet, had pencilled in a 1.2% increase.
Clothing stores reported a monthly sales surge of 22%, rebounding from a large fall in November, when non-essential stores were closed during England's second national lockdown. They are closed again currently for a third lockdown.
Year-on-year, retail sales grew 2.9%. Non-store retailers - which includes online shopping - racked up 44% growth, and food stores saw a 4.4% increase. This annual growth rate accelerated from November's 2.1% increase, though was again below consensus estimates, which had expected a rise of 4.0% for December.
"December's retail sales increased slightly, driven by an improved month for clothing sales, as the easing of some lockdown measures for parts of the month meant more stores were able to open," said Jonathan Athow, deputy national statistician for Economic Statistics at the ONS.
In 2020 as a whole, UK retail sales fell an estimated 1.9% when compared with 2019, the largest year-on-year fall since records began in 1997, the ONS said.
Athow added: "Retail sales for 2020 saw their largest annual fall in history as the impact of the pandemic took its toll. Clothing retailers fared particularly badly, with a record annual fall of over 25%, while movement restrictions led to a record year-on-year decline for fuel sales."
Some sectors were able to buck the trend in 2020. It was a strong year for internet sales, with record highs for food and household goods sales online.
Expected to confirm the negative current state of the UK economy, flash PMI readings are due at 0930 GMT. Consensus, according to FXStreet, sees the UK manufacturing PMI falling to 54.0 points in January from 57.5 in December. The services PMI is expected to slide to 45.0 from 49.4 the month before.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 6,695.78
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Hang Seng: down 1.6% at 29,441.63
Nikkei 225: closed down 0.4% at 28,631.45
DJIA: closed down 12.37 points at 31,176.01
S&P 500: closed up 1.22 points at 3,853.07
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GBP: down at USD1.3671 (USD1.3732)
EUR: flat at USD1.2158 (USD1.2151)
Gold: soft at USD1,860.20 per ounce (USD1,864.60)
Oil (Brent): down at USD55.54 a barrel (USD56.05)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
0930 GMT UK flash purchasing managers index
1100 GMT Ireland wholesale price index
0930 CET Germany flash PMI
1000 CET EU flash PMI
0945 EST US flash manufacturing and service PMI
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The UK's public sector debt to GDP ratio in December was at elevated levels last seen in the 1960s, the Office for National Statistics said. Public sector net borrowing, excluding public sector banks, was estimated to have been GBP34.1 billion in December, up by GBP28.2 billion compared to a year ago. This marks both the highest December borrowing and the third-highest borrowing in any month since monthly records began in 1993. Borrowing in the first nine months of the financial year - being April to December - was estimated to have been GBP270.8 billion, a sharp GBP212.7 billion higher than the same period a year ago and the highest public sector borrowing in any April-December period since records began. "The extra funding required to support government coronavirus support schemes combined with reduced cash receipts and a fall in gross domestic product have all helped push public sector net debt as a ratio of GDP to levels last seen in the early 1960s," the ONS noted. Public sector net debt at the end of December was equivalent to 99.4% of GDP, the highest debt to GDP ratio since the financial year ending 1962.
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Consumer prices in Japan slipped deeper into deflationary territory on an annual basis at the end of 2020. According to the Statistics Bureau, consumer prices fell 1.2% year-on-year in December, after a 0.9% annual drop in November. Although the decline was steep, a 1.3% drop was expected, according to consensus cited by Pantheon Macroeconomics.
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BROKER RATING CHANGES
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DEUTSCHE BANK RAISES LAND SECURITIES TO 'BUY' ('HOLD') - TARGET 730 PENCE
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DEUTSCHE BANK RAISES BRITISH LAND TO 'BUY' ('HOLD') - TARGET 490 PENCE
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CITIGROUP CUTS CRH TO 'NEUTRAL' (BUY) - PRICE TARGET 40 EUR
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PEEL HUNT INITIATES SAGE GROUP WITH 'BUY' - TARGET 735 PENCE
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BARCLAYS CUTS BUNZL TO 'EQUAL WEIGHT' ('OVERWEIGHT') - TARGET 2350 (2750) PENCE
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COMPANIES - FTSE 100
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Pharmaceutical firms GlaxoSmithKline and Johnson & Johnson noted the US Food & Drug Administration's approval of Cabenuva, the first long-acting regimen for the treatment of human immunodeficiency virus, created by ViiV Healthcare. ViiV Healthcare is majority owned by London-based Glaxo, with New York-based Pfizer and Osaka-based Shionogi as shareholders. Cabenuva was co-developed with Janssen Pharmaceutical Co of New Jersey-based Johnson & Johnson and ViiV Healthcare, and consists of Janssen's rilpivirine and ViiV Healthcare's cabotegravir. Cabenuva is the first and only once-monthly, long-acting regimen for the treatment of human immunodeficiency virus type 1, or HIV-1, infection in adults.
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Next said late Thursday it would not come to the rescue of Arcadia Group as it withdrew its interest in acquiring the Topshop owner. Philip Green's Arcadia retail empire collapsed into administration at the start of December after it became the latest company hurt by the coronavirus pandemic. The high street clothing retailer has been touted as one of the most likely suitors in the process, with the listed retailer bidding for the group in partnership with US hedge fund Davidson Kempner, but was unable to come to an agreement with administrators. "Next announces that it has withdrawn from the process to acquire any, or all, of the Arcadia Group from the Administrator, as our consortium has been unable to meet the price expectations of the vendor." Next said it wished the administrator and future owners well in their endeavours to "preserve an important part of the UK retail sector". JD Sports Fashion, Frasers Group and boohoo Group have also been reported as having an interest in acquiring Arcadia brands.
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The first few days of a series of planned strikes by British Airways cargo workers have been called off after a breakthrough in a dispute over pay and conditions. Members of the Unite union based at Heathrow were due to walk out on Friday and again for several days in the coming weeks. Unite Assistant General Secretary Howard Beckett said on Thursday: "As a result of significant progress at talks held today between BA's senior management and Unite, the first three days of the nine days of BA Cargo strikes due to begin tomorrow have been called off. Unite believes this act of good faith will help ensure that a final resolution agreeable to all parties can be reached in the coming days." British Airways is part of International Consolidated Airlines Group.
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COMPANIES - FTSE 250
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Computacenter said it now expects adjusted pretax profit for 2020 will be in excess of GBP195 million. This follows continued positive trading for the computer services provider through to the end of the year. Back in December, Computacenter said profit was "unlikely to be less than" GBP190 million, already a jump from 2019's GBP146.3 million. Computacenter on Thursday said revenue grew by 8% in 2020, seeing strong growth in Technology Sourcing product sales into the public sector and services-based customers. "The positive momentum we have seen in trading since the start of the pandemic shows no sign of abating, and our pipelines for both Technology Sourcing and Services are as strong as at any time we have seen in the last year," said Computacenter.
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Kainos said it expects results for its current financial year to be ahead of market expectations. The information technology consulting and software provider noted that continued momentum has driven a strong trading performance thus far in its financial year ending March 31. Kainos added that it is well-positioned for further growth and remains confident in its strategy. "Looking ahead, our robust pipeline, strong balance sheet and significant contracted backlog underpins our confidence in our outlook," the company said.
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London and Johannesburg-listed financial services firm Ninety One in a brief update said assets under management stood at GBP128.6 billion on December 31, up 8.1% from GBP119.0 billion at the end of September.
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Mediclinic, which is also listed in both London and South Africa, reported third-quarter revenue growth though remained cautious on outlook. The private hospital operator said third-quarter revenue was up 2.5%, supported by "unseasonably high inpatient activity" in December at Mediclinic Southern Africa and Mediclinic Middle East. This was partially offset by the lower patient volumes at Hirslanden, Switzerland. "The uncertainty caused by the pandemic has reduced visibility on activity levels and therefore the group remains cautious as to the full impact on near-term operating performance," Mediclinic said.
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The latest James Bond film instalment 'No Time To Die' will be delayed again, according to a statement on the film's website. 'No Time To Die' will be released in cinemas on October 8. The film was originally scheduled for release in April 2020, but was first pushed back to November as a result of the pandemic. In October, the movie's release was pushed out to April 2021, and has now been delayed for a third time. The news will come as a further blow to cinema chain operators, such as Cineworld Group, as a string of big-name Hollywood film releases have been pushed back due to the coronavirus.
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COMPANIES - GLOBAL
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Shares in personal care company Shiseido climbed in Tokyo on Friday, following a report that it plans to sell a unit to CVC Capital Partners for nearly USD2 billion. Bloomberg on Thursday reported that Shiseido is in advanced talks to sell its shampoo and affordable skincare arm to CVC in a deal in the range JPY150 billion and JPY200 billion, between USD1.45 billion and USD1.93 billion. In response to the report, Shiseido on Friday said "no such information has been made public by the company". It did add, however: "The company is currently in discussions with CVC Asia Pacific Ltd regarding a transfer of its Personal Care business, mainly delivered in the Asian market, around the first half of this year and subsequent joint management of the business aimed at its further growth and development as a shareholder of the company which will operate the transferred business; however, no formal decisions have been made as of yet."
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Friday's Shareholder Meetings
Character Group PLC - AGM
Ironveld PLC - AGM
Salt Lake Potash Ltd - GM
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By Tom Waite; thomaslwaite@alliancenews.com
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