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(Alliance News) - UK retail sales continued to slide last month, data from the Office for National Statistics showed on Friday.
On a monthly basis, retail sales volumes fell 0.2% in September, following August's 0.6% decline. While this was an improvement on August's result, markets had been expecting a rebound in September, according to FXStreet, as analysts had pencilled in growth of 0.5%.
"Retail sales volumes have fallen each month since April 2021 when non-essential retailing re-opened and retail sales reached levels substantially above those before the pandemic. This is the longest period of consecutive monthly falls in the history of this series," the ONS noted.
Darren Morgan, director of Economic Statistics at the ONS, said household goods were the main driver of September's decline.
Non-food stores saw sales fall 1.4%, with household goods store sales down 9.3% largely due to a 15% slump in furniture and lighting stores. Sales volume for household goods stores have fallen each month since their peak in May, following the re-opening of non-essential retail in April.
Morgan added: "Petrol sales exceeded their pre-pandemic level for the first time, with filling stations reporting very strong sales during the last week of September."
At the end of September, the UK experienced a rush for petrol amid fears of shortages, driven by a lack of tanker drivers. Panic buying resulted in massive queues and left petrol pumps dry throughout the country, but the situation has stabilised since.
Year-on-year, UK retail sales fell 2.6% in September, accelerating from August's 0.9% fall. Nonetheless, sales volumes are still 4.2% higher than pre-virus levels.
"Consumers spending their weekends queuing for petrol further curbed sales in September after what was already a poor end to the summer," commented Aled Patchett, head of retail and consumer goods at Lloyds Bank.
"Even as we enter the traditionally buoyant golden quarter – normally the busiest period for retailers in the run up to Christmas – a number of challenges threaten to undermine confidence. Chief among these are the current high gas prices which create a challenge on two fronts by increasing operating costs and reducing the spending power of consumers." Patchett added.
"While these issues are likely to persist for some time yet, alongside rising stock costs and HGV driver shortages, retailers will hope that consumer plans to banish the memories of a particularly dour festive period last year go undeterred."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.1% at 7,194.05
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Hang Seng: up 0.4% at 26,118.75
Nikkei 225: closed up 0.3% at 28,804.85
DJIA: closed down 6.26 points at 35,603.08
S&P 500: closed up 13.59 points, or 0.3%, at 4,549.78
Nasdaq Composite: closed up 94.02 points, or 0.6%, at 15,215.70
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EUR: soft at USD1.1637 (USD1.1640)
GBP: down at USD1.3794 (USD1.3808)
USD: up at JPY113.94 (JPY113.85)
Gold: up at USD1,793.35 per ounce (USD1,780.15)
Oil (Brent): flat at USD84.15 a barrel (USD84.12)
(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
0930 CEST Germany flash purchasing managers' index
1000 CEST EU flash PMI
0930 BST UK CIPS-Markit flash manufacturing and services PMI
1100 BST Ireland wholesale price index
0945 EDT US flash manufacturing PMI
0945 EDT US flash services PMI
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The Bank of England's November policy meeting will have a "live" decision about whether or not to raise interest rates, the UK central bank's new chief economist told the Financial Times. Huw Pill said the rate of UK consumer price inflation is likely to be "close to or even slightly above 5%" early next year. As a result, the decision at the Monetary Policy Committee's November 4 meeting "is finely balanced", he told the newspaper, adding: "I think November is live." Pill didn't disclose how he intends to vote, the FT said. At the September meeting, the nine-strong MPC voted unanimously to keep the key Bank Rate unchanged at 0.1%. However, Dave Ramsden and Michael Saunders voted to taper quantitative easing in a 7-2 committee vote that maintained the current pace of bond purchases.
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BROKER RATING CHANGES
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DEUTSCHE BANK RAISES BARCLAYS PRICE TARGET TO 250 (240) PENCE - 'BUY
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DEUTSCHE BANK RAISES ST JAMES'S PLACE PRICE TARGET TO 1,800 (1,770) PENCE - 'BUY'
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COMPANIES - FTSE 100
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London Stock Exchange Group reported growth in its third quarter as it continues to integrate Refinitiv. LSEG reported a "strong performance across all divisions", leading to a 2.1% increase in total income to GBP1.78 billion in the third quarter of 2021 and gross profit growth of 2.4% to GBP1.56 billion. It has continued to integrate financial information and trading platform Refinitiv and is "comfortably" on target for full-year run-rate cost synergy delivery of GBP125 million. "The group is well placed as we make targeted investments in product and technology enhancements to help us meet the needs of our customers and capitalise on the growth trends driving change across our industry," said Chief Executive David Schwimmer.
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InterContinental Hotels said it saw trends improve towards pre-virus levels amid strong domestic demand over the summer. The Holiday Inn hotel owner reported third-quarter RevPAR - revenue per available room, a key hospitality metric - growth of 66% on a year ago, though it remained down 21% on 2019. In its half-year results, IHG reported RevPAR up 20% on 2020 and down 43% on 2019. In the Americas, RevPAR was up 76% on 2020 and down 10% on 2019, with US RevPar down just 7% on pre-virus levels. In Europe, Middle East, Africa & Australia, RevPAR was down 43% on 2019. In greater China, RevPAR was down 30% on 2019, with IHG noting that in July, this was down just 6% due to strong domestic leisure demand. However, a resurgence in Covid cases in August saw RevPAR weaken to a 55% decline in August, though the recovery resumed once more in September. "While we remain vigilant to fluctuating Covid restrictions in different markets, the pace of returning demand is very encouraging as travel increasingly re-opens in every region," said Chief Executive Keith Barr.
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J Sainsbury has decided to retain its banking arm after having looked for buyers. The grocer said it believes it was in the best interests of shareholders to explore expressions of interest for Sainsbury's Bank, but has decided that these do not offer better value than will be realised through keeping the unit. As such, talks over the bank have ended. "We continue to make progress strengthening and simplifying our Financial Services business in line with our strategy and we remain comfortable with consensus profit forecasts for the division," said Sainsbury's.
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Athleisurewear retailer JD Sports has bought an 80% stake in Crete-based Cosmos Sport. Cosmos operates 57 stores in Greece and 3 in Cyprus across its Cosmos fascia - its core offering which has an elevated sporting goods and lifestyle proposition - and Sneaker 10, a premium footwear offering. JD Sports didn't provide financial details for the acquisition - saying it is too small for that to be required - but said it has agreed put and call options for the remaining 20% stake with the company founders, the Tsiknakis Family. Cosmos Sport had EUR52 million in revenue in 2020.
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COMPANIES - MAIN MARKET AND AIM
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SIG lifted its guidance after a strong trading performance continued into September. The building products supplier reported like-for-like sales growth of 17% in the third quarter of 2021 on a year ago, following on from 33% growth in the first half - a figure the company said was "distorted" by Covid a year ago. Against pre-Covid 2019 comparatives, third quarter growth was 9%, up from the 1% growth seen in the first half. UK Distribution was the main driver behind the performance. The France and UK Exteriors businesses, and the Poland business, continue to perform very strongly, and Ireland rebounded after a Covid-hit first half. "Whilst supply issues persist across many product groups, order books continue to build and the outlook for materials shortages has become clearer. We are mindful of the potential impact of these shortages should the situation persist for an extended period, but remain highly confident in the effectiveness of our supply chain management and commercial agility," said SIG. The company now expects full-year underlying operating profit to be ahead of current market forecasts. For 2020, SIG made an underlying operating loss of GBP53.3 million, swinging from a profit of GBP42.5 million in 2019.
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COMPANIES - GLOBAL
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L'Oreal expressed confidence going forward as all of its divisions recorded growth in the third quarter. The Paris-based personal care products maker reported 14% sales growth in the third quarter of 2021 to EUR8.00 billion. On a like-for-like basis, sales rose by 13% year-on-year. For the nine months to September 30, sales grew by 15% to EUR23.19 billion. Like-for-like sales were up 18% year-on-year. "The group's sales increased by 9.3% like-for-like over two years, compared with the first nine months of 2019, with a remarkable acceleration in the third quarter. All divisions increased their growth over two years quarter after quarter," said Chief Executive Nicolas Hieronimus.
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Air Liquide said energy price hikes boosted its performance in the third quarter of 2021. The Paris-based industrial gases supplier reported a 17% increase in third-quarter revenue to EUR5.83 billion. Revenue was up about 6% when compared to the third quarter of 2019. Chair & Chief Executive Benoit Potier said: "Air Liquide is confident in its ability to further increase its operating margin and to deliver recurring net profit growth at constant exchange rates."
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Friday's Shareholder Meetings
Duke Royalty Ltd - AGM
Fiske PLC - AGM
Superdry PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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