(Alliance News) - UK retail sales improved in July, data showed on Friday, managing to defy expectations for a decline.
However, the outlook for AIM-listed retailer Joules is far less rosy.
According to the Office for National Statistics, UK retail sales volumes increased 0.3% in July from June, outperforming expectations of a 0.2% decline, according to FXStreet-cited consensus. They had fallen 0.2% on a monthly basis in June.
On a yearly basis, sales fell 3.4%, just missing consensus of a 3.3% slide. In June, they had slumped 6.1% year-on-year.
ING said the July retail sales figures brought a "glimmer of hope". However, the Dutch bank added: "It is still not helping to change the cost-of-living crisis narrative."
One retailer dealing with the fallout of the cost-of-living crisis is Joules, which added that the recent heatwave is compounding woes.
Scorching hot weather has hit sales of winter clothing, including "rainwear, knitwear, and wellies". Trading over the five weeks to August 14 has "softened materially," it cautioned.
Margins have taken a hit and Joules now expects a "significant loss" in its first half. It expects an improved second half, as it reaps the rewards of self-help work.
"In light of this, the board currently expects the group to deliver a full year loss before tax, and before adjusting items, significantly below current market expectations," it said.
Earlier this week, Joules named Jonathon Brown as its new chief executive officer, effective from September 30. Brown will initially join the company as CEO designate on September 7 and then take up the role on September 30. Most recently, he was the CEO of Compare the Market, and has also held positions at retailers such as Kingfisher and John Lewis.
The new appointment came after under-pressure Joules said it was in talks with Next about adopting its Total Platform services. The move, if it goes ahead, will see Next inject about GBP15 million into Joules.
Joules said on Friday: "The group continues positive discussions with Next about both adopting its Total Platform services to support its long-term growth plans and a potential equity investment. There can be no certainty that these discussions will lead to any agreement, and further announcements in this regard will be made if and when appropriate."
Shares in Joules were down 40% in opening trade.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 7,523.79
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Hang Seng: down 0.1% at 19,736.43
Nikkei 225: closed slightly lower at 28,930.33
S&P/ASX 200: closed slightly higher at 7,114.50
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DJIA: closed up just 18.72 points, or 0.1%, at 33,999.04
S&P 500: closed up 9.70 points, or 0.2%, at 4,283.74
Nasdaq Composite: closed up 27.22 points, or 0.2%, at 12,965.34
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EUR: down at USD1.0077 (USD1.0132)
GBP: down at USD1.1908 (USD1.2000)
USD: up at JPY136.53 (JPY135.10)
Gold: down at USD1,754.22 per ounce (USD1,761.70)
Oil (Brent): down at USD95.88 a barrel (USD96.12)
(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
1000 CEST EU balance of payments
0900 EDT US Fed Richmond President Thomas Barkin speaks
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UK consumer confidence has hit a record low amid "acute concerns" in the face of the soaring cost of living and bleak economic prospects. GfK's long-running Consumer Confidence Index fell three points in August to minus 44, its lowest figure since records began in 1974. All five measures that make up the index fell last month, including confidence in personal finances and the general economy. Confidence in the general economy looking back over the previous year has decreased for eight months in a row to reach minus 68 – some 26 points lower than last August. Similarly, confidence in the economy for the year ahead has also seen a consistent sharp decline over the same period, falling to a new low of minus 60. The forecast for personal finances over the next 12 months fell five points on July to minus 31 – some 42 points lower than this time last year. The Major Purchase Index, a measure of confidence in buying big ticket items, fell by four points in August to minus 38 – a total of 35 points lower than this time last year.
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Families in the UK face a grim winter as experts predict the cap on energy bills will hit close to GBP3,600 per year from October – before rising again next year. It is a forecast that will pile pressure on the government to take rapid action, and spells out pain for more than 20 million households. The observation window – when regulator Ofgem tracks the market to decide what the cap will be – slammed shut on Thursday, so the prediction is more certain than ever. The regulator is set to announce the new price cap, which will come into effect from October, next Friday. Auxilione, an energy consultancy, said its final prediction is that officials will set the cap at GBP3,576 per year for the average household. The cap is currently GBP1,971.
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Japan's core consumer prices for items excluding fresh products rose 2.4% on-year in July, the highest in more than seven years and marking four straight monthly gains of more than two percent, government data showed Friday. While energy prices continued to mount, the speed of the increase has slowed, according to data released by the internal affairs ministry, which matched market expectations. The figure is the highest since December 2014. Prices have increased for nearly 80% of non-fresh food products, NLI Research Institute said, predicting that core CPI may touch 2.9% by October. "Until now, sharp rises in energy prices, triggered by rising crude oil costs, drove up the core CPI. But the main cause is shifting to food," NLI said.
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BROKER RATING CHANGES
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Jefferies cuts Compass group to 'hold' (buy) - price target 2,000 pence
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Jefferies cuts Bunzl to 'hold' (buy) - price target 2,900 (3,000) pence
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Jefferies cuts Mears Group to 'hold' (buy) - price target 250 (275) pence
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COMPANIES - FTSE 250
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HICL Infrastructure said it has bought a minority equity stake in Cross London Trains for an undisclosed amount. HICL is a London-based infrastructure investment firm. Cross London Trains is a public private partnership that owns the Thameslink passenger rail route which covers the North-South London commuter rail corridor and serves both Luton and Gatwick airports. Following completion of the acquisition, which is expected to be in third quarter of 2022, Cross London Trains will represent around 3% of HICL's portfolio by value. HICL said that it will be its third investment in the rail sector, after High Speed 1 and the Dutch High Speed Rail Link.
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COMPANIES - SMALL CAP
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Just Eat Takeaway said it has relinquished a 33% stake in the iFood joint-venture to Johannesburg- and Amsterdam-listed internet assets investor Prosus for up to EUR1.8 billion. It said EUR1.5 billion will be payable immediately. "Just Eat Takeaway.com remains focused on improving its profitability and on a disciplined allocation of capital. It will retain the transaction proceeds to maintain its balance sheet strength and to service repayments of its upcoming debt maturities," Just Eat said. iFood has online food and delivery operations in Latin America. The deal comes as Just Eat Takeaway explores a deal for its Grubhub unit. Just Eat completed its USD7.3 billion acquisition of Chicago, US-headquartered Grubhub in June last year. It first mulled a sale of Grubhub in April, and on Friday said it continues to "actively explore" this.
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Kingspan posted a sharp interim earnings hike and upped its payout. Revenue in the half-year to June 30 rose 42% to EUR4.15 billion from EUR2.92 billion a year earlier. Pretax profit surged 30% to EUR387.6 million from EUR297.2 million. "Despite a challenging trading environment Kingspan delivered record half year results, with revenues over EUR4 billion for the first time. We have been able to navigate large input cost increases with only modest margin impact," Chief Executive Gene Murtagh commented. Kingspan upped its payout by 29% to 25.6 cents from 19.9 cents. The CEO added: "Looking forwards we retain the outlook flagged in our June trading update but are confident in the long term demand for the energy efficient solutions we deliver. Whilst inflationary pressures have eased in recent months, the context of energy supply constraints over the winter months in Europe will be something we will be closely monitoring."
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COMPANIES - GLOBAL
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Apple is warning of a flaw that is allowing hackers to seize control of iPhones, iPads and Mac computers, and is urging users to install emergency software updates. Patches were released Thursday and Wednesday by the tech titan to fix what it described as a vulnerability hackers already knew about and may be taking advantage of. "Apple is aware of a report that this issue may have been actively exploited," the Silicon Valley-based company said. Apple did not disclose whether it had information regarding the extent to which the issue has been exploited. The technical description indicated that a hacker could use the flaw to take control of devices, accessing any of its data or capabilities.
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Facebook-owner Meta said it had kicked one of the most influential US anti-vaccination groups off the social media network for spreading Covid-19 misinformation. The Children's Health Defense, which has been a critic of Covid vaccines, immediately accused Meta of stifling its free speech rights. "Facebook is acting here as a surrogate for the federal government's crusade to silence all criticism of draconian government policies," CHD founder Robert Kennedy Jr., nephew of late president John F. Kennedy, said in a press release. Meta spokesperson Aaron Simpson told AFP that the group's accounts at Facebook and Instagram were shuttered on Wednesday. The ban came after repeated violations of Meta's misinformation rules.
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Friday's shareholder meetings
Braemar Shipping Services PLC - AGM
Citius Resources PLC - AGM
Next Fifteen Communications Group PLC - GM re acquisition of M&C Saatchi
Volex PLC - AGM
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By Lucy Heming; lucyheming@alliancenews.com
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