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Worst Christmas in a decade for UK retailers

12:27 10 January 2019

Consumer spending failed to receive the usual festive bump according to the latest retail sales figures from KPMG with the British Retail Consortium (BRC) estimating that sales were flat in December. In the year before the same month saw an increase of 1.4% and retailers will no be doubt disappointed that there was a similar pick-up amongst shoppers this time out. The BRC does not announce the retailers which contribute to the figures, but it is commonly thought that they are weighted more towards high street operators who are the bulk of the lobby group’s membership and doesn’t include the large online players such as eBay and Amazon.

FTSE rally running out of steam?

The rally seen in recent sessions in the FTSE 100 may be running out of steam a little with the market finding some resistance around the 6900 and trading slightly lower on the day. Despite a plethora of Brexit-related news continuing to dominate the headlines, there’s not really been anything market moving for the pound and sterling continues to trade in a fairly narrow range against most of its peers.      

 

Halfords shares collapse after profits drop

There’s been a large drop of more than a fifth in shares of Halfords today, with the stock tumbling to its lowest level in over 6 years after the company delivered a concerning warning on profits. Full-year pre-tax profits are now projected to be between £58-62M, well below the previous estimate in November which forecast them to be broadly inline with last year’s £71.6M. The firm has blamed the performance on weak consumer confidence and rather bizarrely “exceptionally mild weather”.

 

Retailers are renowned for blaming the weather for poor performance with a drop in sales frequently coming when it has been suspiciously too warm or too cold, but these claims appear especially-far fetched for a company that generates the bulk of its business from bikes and cycling accessories - an area that would surely benefit from milder conditions.  

 

Tesco gains despite “challenging” environment warning

While the Christmas period on the whole may not have provided the panacea that many retailers had hoped, there have been some relative success stories with supermarkets on the whole appearing to have outperformed traditional high street retailers. Tesco is the latest supermarket to deliver a solid update, announcing an increase in like-for-like sales of 2.6% over Christmas and investors have warmly greeted the news by sending the stock higher by almost 2%.

 

Despite the seemingly good news, CEO Dave Lewis has cautioned that the environment remains challenging but inside he will likely be quietly content with the performance. M&S were also out this morning with their most recent figures, showing a 2.2% drop in same-store sales compared to last Christmas. Looking into this more closely the drop came about mainly due to weak sales in clothing and homeware, while the food sector actually posted slightly better than expected numbers.      

 

This content has been created by X-Trade Brokers Dom Maklerski S.A. This service is provided by X-Trade Brokers Dom Maklerski S.A. (X-Trade Brokers Brokerage House joint-stock company), with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. X-Trade Brokers Dom Maklerski S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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