FTSE hits new high but European markets dip
As the dollar weakened and US markets fell on disappointment at the lack of details of Donald Trump’s economic plans at Wednesday’s press conference, markets suffered a tricky day.
The FTSE 100 fell back initially as the pound gained ground, hitting overseas earners, and pharmaceutical shares dropped after Trump’s talk of clamping down on the prices they charged for their medicines. But as the pound dipped later in the session, the FTSE 100 just about managed to end in positive territory, its 11th successive closing high.
But in Europe a rise in the euro - due to the weak dollar as well as the minutes of the last ECB meeting - left markets flagging. The final scores showed:
- The FTSE 100 finished up 1.88 points or 0.03% at 7292.37
- Germany’s Dax dropped 1.07% to 11,521.04
- France’s Cac closed down 0.51% at 4863.97
- Italy’s FTSE MIB fell 1.69% to 19,156.59
- Spain’s Ibex edged down 0.01% to 9407.4
- But in Greece, the Athens market added 0.28% to 665.21
On Wall Street, the Dow Jones Industrial Average is currently down around 20 points at 19,834 - well off the 20,000 barrier it almost breached last Friday.
On that note it’s time to close up for the evening. Thanks for all your comments, and we’ll be back tomorrow.
The FTSE 100 rally might not have much further to go, says Capital Economics. The think tank’s John Higgins said:
It is tempting to attribute the FTSE 100’s winning streak to a renewed plunge in sterling. But other factors have also been at play. These include higher commodity prices, the resilience of the UK economy in the wake of the vote for Brexit and spill-over effects from Trump’s election victory. Looking ahead, we remain positive on the FTSE 100, but don’t expect it to make much more headway.
We doubt that there is much life left in the FTSE 100 rally.. Indeed, we forecast that it will end 2017 at 7,500, which is only about 3% above its level today. Granted, we expect the UK economy to continue to fare quite well. However, there are three reasons why we are cautious.
First, we forecast a small gain in sterling in trade-weighted terms, as a further decline against the dollar (to $1.20/£ from $1.23/£) is more than offset by a rise against the euro (to €1.26/£ from €1.15/£). Second, we expect the rally in oil prices to peter out. Our end-year forecast for Brent crude is $60pb, which is not much above its price today (around $56pb). And third, we think the US stock market will run out of steam, as the enthusiasm with which shareholders greeted Trump’s victory starts to wane and profit margins are squeezed. Our end-2017 forecast for the S&P 500 is only 2,300, which is barely above its level now.
Commenting on the market falls, Connor Campbell at Spreadex said:
After briefly sneaking into positive territory the FTSE slipped back into the red this afternoon, with the index’s 2017 winning streak potentially about to come to an end.
Despite a largely healthy set of commodity stocks, and a wave of positive Christmas updates from its key retailers, it seems like there was just too much going on for the FTSE this Thursday. The negative reaction to some of those trading statements, most notably Tesco and Primark-owner Associated British Foods, alongside the pound’s rebound against the dollar, largely prompted by the greenback’s own weaknesses, prevented the UK index from building beyond the 7300 it struck yesterday.
Over in the US things took a rather sharp turn downwards, with the Dow Jones plunging by 150 points after the bell. It seems that both the Dow and the dollar are still displeased with the lack of policy detail in Donald Trump’s press conference on Wednesday. Especially disgruntled are the US pharmaceutical stocks, the likes of Shire and Pfizer continuing yesterday’s losses after the President-elect claimed that the sector was ‘getting away with murder’ in regards to drug prices.
In the Eurozone, meanwhile, the DAX and CAC incurred some hefty losses as the euro hit a one month high against the dollar and took 0.3% off the pound. The currency appeared to be prompted by the latest ECB meeting minutes released this afternoon, with the central bank apparently fairly divided ahead of their to extend QE at a reduced rate of purchase.
It looks like the chances of the Dow Jones Industrial Average breaking through the 20,000 barrier in the near future are getting slimmer, nor is the FTSE 100 currently on course to continue its record breaking run of closing highs.
The Dow is currently down 144 points at 19,810 on continuing disappointment with the lack of detail from Donald Trump on his spending and tax plans.
Meanwhile the FTSE 100 has slipped 9 points to 7281, having climbed as high as 7302 and fallen as low as 7263.
Back with UK retailers, and we’ve taken a look at the Christmas winners and losers so far. (Spoiler: most of them are winners).
The full report is here:
Wall Street opens lower
With the dollar weakening after president-elect Donald Trump failed to spell out any spending or tax plans in Wednesday’s press conference, US markets have fallen back in early trading.
After ending nearly 100 points higher on Wednesday after a volatile session as Trump spoke, the Dow Jones Industrial Average has now gone into reverse, down 75 points or 0.37% to 19.879.
The S&P 500 and Nasdaq Composite both slipped around 0.3% at the open.
US markets, indeed global markets, have seen sharp rises recently, partly fuelled by Trump’s declarations of increased spending and other measures to boost the economy. Investors had been hoping for more details at Wednesday’s event, but in the end were disappointed.
Oil prices climb by 2%
Oil prices are moving higher on reports that Opec members are sticking to the production cuts agreed last November. Reuters reports:
Kuwaiti Oil Minister Essam Al-Marzouq told [an Abu Dhabi] conference Kuwait had already cut its oil output by more than it promised under the OPEC deal, without giving further details.
Iraq Oil Minister Jabar Ali al-Luaibi told reporters Iraq was “hoping for a better price”. Iraq had reduced its oil exports by 170,000 bpd and was cutting them by a further 40,000 bpd this week, he said.
BMI Research said overall “compliance to the OPEC/non-OPEC oil production cut appears to be positive ... We calculate compliance with production cuts at around 73 percent,” led by high compliance from members of the Gulf Cooperation Council, namely Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain and Oman.
Crude has also been boosted by news of record Chinese car sales, which grew by 13.7% in 2016.
Brent is currently up 2.12% at $56.27 a barrel while West Texas Intermediate has climbed 2.05% to $53.32.
Updated
US jobless claims rise less than expected
The number of Americans filing for unemployment benefits rose by less than expected last week.
Initial benefit claims rose by 10,000 to a seasonally adjusted 247,000, compared to forecasts of an increase to 255,000. The previous week’s figure of 235,000 was revised upwards by 2,000, the US Labor Department said.
The benefit claim number has been below 300,000 - a level seen as indicating a healthy jobs market - for 97 consecutive weeks, the longest streak since 1970.
The euro has hit a one month high of $1.0683 against the dollar after the ECB minutes showed a split on extending the central bank’s bond buying programme.
The rise is also due to weakness in the dollar following a lack of detail about Donald Trump’s spending and tax plans at Wednesday’s press conference.
Shorter ECB accounts: QE "recalibration" due to reduced deflation risks (hawkish), but still no sign of core inflation upturn (dovish).
— Frederik Ducrozet (@fwred) January 12, 2017
ECB - members disagreed over bond buying extension
The European Central Bank’s decision to extend its bond buying programme followed signs of a continuing moderate recovery in the eurozone economy, but insufficient progress towards a sustained pick up in inflation.
At its December meeting the ECB decided to extend the programme by nine months to December 2017 but cut the monthly amount of bonds bought from €80bn to €60bn, but there were some differences of opinion according to the just-released minutes.
Some members initially preferred to keep things as they were, as that had the merit of continuity and was in line with market expectations. But the minutes said the option of extending the programme “allowed for a more sustained market presence and, therefore, a more lasting transmission of the Governing Council’s stimulus measures.”
And it meant that if the recovery faltered the decision could be reversed. The minutes said: “At the same time, if the outlook became less favourable, or if financial conditions became inconsistent with further progress towards a sustained adjustment of the inflation path, the Governing Council could return to a pace of €80 billion per month.”
So although the change was eventually implemented, some members remained opposed: “A few members could not support either of the two options that had been proposed, while welcoming the scaling-down of purchases and other elements of the proposals, in view of their well-known general scepticism regarding the APP [asset purchase programme] and public debt purchases in particular.”
Updated
After a volatile performance during president-elect Donald Trump’s press conference, the Dow Jones Industrial Average ended the day 98 points higher at 19,954, heading back towards the elusive 20,000 barrier.
But the futures market is suggesting the Dow will dip back down again at the open, with a fall of around 42 points forecast at the moment.
The weekly jobless figures, due before the US market opens, could have some influence and are expected to rise from last week’s near 43 year low.
Here’s our story on the John Lewis bonus cut. Sarah Butler writes:
John Lewis has warned that its annual bonus for staff will be significantly lower than last year as it prepares to take a hit from the post-Brexit slump in sterling.
Charlie Mayfield, chairman of the staff-owned group, which includes Waitrose, said he anticipated a “challenging” year ahead as retailers would have to absorb a big chunk of the rising cost of importing goods just as they are coping with shoppers’ shift to buying online....
Mayfield said the devaluation of sterling was “one of the most significant factors overhanging the outlook for the year ahead.”
This will be the fourth consecutive year that the group, which is collectively owned by its staff, has reduced the payout, but it is highly unusual for it to cut the bonus when profits rise. Last year its 91,500 employees, known as partners, were awarded bonuses of 10% of salary, the lowest for 13 years, averaging just over £1,500 each.
The bonus payout started in 1920. It was suspended during the second world war and the early 1950s recession, and peaked at 24% of salary in the 1980s. The highest payout in recent years was 18% in 2011.
The full report is here:
Here’s a quick roundup of the day’s main retail updates from George Salmon, equity analyst at Hargreaves Lansdown:
The first set of positive like-for-likes in the Clothing and Home division for almost two years is the main headline at M&S. While last year’s frankly abysmal performance was hardly a tough benchmark to beat, investors will be hoping that Steve Rowe’s plans to revitalise the group gain some traction and this marks the start of a more positive trajectory.
There was some Christmas cheer at M&S’ high street rival Debenhams too. The group gathered momentum through the all-important Christmas quarter, rounding it off in style by upping like-for-like sales by 5% in the seven weeks to 7 January. It wasn’t just in stores that things look brighter either. Online sales jumped 17% in that period.
It was more of a mixed bag at John Lewis, however. While sales growth of almost 5% means that the tills were certainly ringing, the group says that greater challenges across the retail sector, notably the continuing shift to online, means that profit is likely to come under pressure. Unfortunately for those at the group, the likely upshot here is a significantly lower bonus than last year.
To see evidence of that shift to online spending, look no further than the 30% sales growth that Asos pulled in at the back end of last year. With more customers ordering more often, expectations for full year sales growth have been raised, but this means extra investment too. The group will need to spend another £30m to keep up with the relentlessly increasing demand. This is one of the better problems to have, we feel.
Primark owner Associated British Foods doesn’t do online shopping. Instead, the focus for the retail division is on rolling out its pile it high, sell it cheap format across Europe and the US. With expansion continuing apace, investors may be excused for being a touch disappointed by the 11% growth in sales reported today. Square footage increased by 12% in the last year.
Updated
Still with the economy, and eurozone industrial production rose more sharply than expected in November.
Output climbed by 1.5% month on month compared to forecasts of a 0.5% increase. Year on year it rose 3.2%, much better than the 1.6% expected.
The October figures were revised upwards, with a 0.1% rise month on month compared to an earlier reported fall of 0.1%. Dennis de Jong, managing director at UFX.com, said:
After stuttering throughout the summer, industrial production in the eurozone bounced back with a vengeance in November, which will give the ECB serious grounds for confidence at this early stage in 2017.
The outlook remains weighed down by continued political uncertainty, but the recovery in the region is gathering some real momentum. Unemployment is falling, business confidence is up and the weak euro is a real boost for exporters.
Although Mario Draghi and his ECB colleagues are still faced with some very real political threats, the economy is standing up well in the face of adversity.
The ECB is due to announce its latest monetary policy deliberations next Thursday.
Back with the industrial production figures and Howard Archer, economist at IHS Markit, was also positive but warned of an uncertain outlook:
Even allowing for the fact that industrial production has been highly erratic, November’s jump reinforces our belief that Eurozone GDP growth could well have reached 0.5% quarter-on-quarter in the fourth quarter of 2016. This would be up from 0.3% in both the third and second quarters.
It appears that the Eurozone manufacturing sector carried decent momentum into 2017, and they will be helped by the very competitive euro...
Looking ahead, a concern for Eurozone manufacturers will be that mounting uncertainty over the coming months (particularly political) could cause business and consumers to be cautious in their major spending decisions, thereby constraining demand for capital goods and big-ticket consumer durable goods
It is also very possible that purchasing power for Eurozone consumers’ will become less favourable as inflation picks up, thereby weighing down on demand for big-ticket consumer durables.
In particular, an uncertain political environment could be increasingly problematic for Eurozone growth prospects over the coming months, especially given that the UK’s Brexit vote last June and November’s election of Donald Trump as US President fuels concern over potential political shocks. General elections are due 2017 in the Netherlands (in March), France (in April/May) and Germany (in September), while a 2017 election is very possible in Italy following Prime Minister Renzi’s early-December defeat in the referendum on constitutional reform which has led to his resignation.
And Capital Economics pointed out:
Nov's 1.5% m/m rise in euro-zone Ind. production was boosted by a huge gain of 16.3% in Ireland - a statistical quirk that may be reversed pic.twitter.com/bUsdq182Ii
— Capital Economics (@CapEconEurope) January 12, 2017
German economy grows at fastest rate in five years
Good news for the eurozone as the Germany economy, the major driver of growth in the region, recorded its best performance for five years in 2016.
German GDP grew by 1.9% last year, up from 1.7% in 2015 and better than the expected 1.8% rise. The economy was boosted by strong domestic demand, compensating for sluggish demand for exports. ING economist Carsten Brzeski said the German economy remained an “island of happiness”, adding:
The German economy has once again defied several deep hits. Despite the stock market crash in China, Brexit, Turkey, Trump and Italy, the economy performed its best growth year since 2011. Strong domestic demand has shielded the German economy against most external risks.
And he said the biggest risk to future growth was complacency:
[2016] was a year in which the German economy proved to be more robust than many thought and in which the economy weathered a series of external risks extremely well, thanks to strong domestic demand. In fact, the often controversially discussed refugee crisis and the ECB’s ultra-loose monetary policy turned out to be an economic blessing, artificially extending the long, positive cycle of the economy. The year 2017 will in our view look very much like 2016, only with a bit less of everything. Domestic demand, ie construction and both private and public consumption, should remain the main growth drivers. The biggest risk for the economy is not Trump or political populism in the Eurozone but self-complacency. The economy urgently needs new impetus from new structural reforms and stronger public and private investment. It is very unlikely that it will get any of these before the elections.
UniCredit economist Andreas Rees was also positive:
The German economy remains a stronghold of continuity. With plus 1.9% in 2016, its growth performance was rock solid and even accelerated to its strongest pace in the last five years (2015: +1.7%; 2014: +1.6%). Once again, the major driver was domestic demand in the form of private and public consumer expenditures and not export activity. Imports were even outpacing exports last year. Taking a glimpse into 2017, the German economy remains fundamentally in good shape. The growth drivers will change somewhat, since there will be a (moderate) shift from domestic demand to stronger export activity. What can go wrong? It goes without saying that there are substantial political risks, especially from the US, which could have an (indirect) impact on German exports. Whether and how this will play out still remains to be seen. For 2017, we expect “only” GDP growth of 1.5%. Please note that the reason for the drop is NOT based on fundamentals and definitely not a reason to be worried. Instead, the lower number of working days is artificially weighing on the headline growth number (calendar-day adjusted growth in 2017: +1.8% after also +1.8% last year).
Pharma shares hit by Trump comments
Speaking of Donald Trump, one market moving comment in his press conference related to pharmaceutical companies.
He said drugs companies were “getting away with murder” in the prices they charged and promised that would change. That sent US pharma stocks lower, and theat sentiment has carried over into Europe.
So Shire, Hikma, GlaxoSmithKline and AstraZeneca have all seen their shares fall. Michael Hewson, chief market analyst at CMC Markets, said:
If pharmaceutical companies were hoping for an easier ride from President elect Donald Trump than Hillary Clinton they were quickly disabused of this notion last night when the President elect let rip at the industry’s pricing policies.
Last year was notable for a number of stories related to price gouging including the Mylan story around the Epipen price hikes, and Valeant’s policy of buying older niche drugs and then hiking the prices aggressively, and the antipathy that resulted from these stories has made the industry an easy target for a President who may feel compelled to get some quick political wins.
At a time when pharmaceutical companies were hoping for a more benign investment environment last night’s remarks were a reminder, if any were needed, as well as a warning to the sector and other sectors as well, of the President elects propensity to adopt a scatter gun approach to domestic policy.
Investors would do well to bear this in mind given that the recent stock market rally doesn’t appear to have factored this into their investment scenarios. The Trump Presidency is unlikely to be a one way bet for stock markets.
Updated
A stronger pound is also taking some of the shine off the leading index.
One of the driving factors behind the recent surge in the FTSE 100 to record levels has been the weakness of sterling, which benefits overseas earners and makes UK assets more attractive to international investors.
But disappointment that president-elect Donald Trump - in his first press conference since July - failed to spell out details of his plans to boost the US economy with infrastructure spending and new tax measure has sent the dollar lower.
Against the US currency the pound has added 0.32% to $1.2252, although sterling is virtually flat against the euro at €1.1528.
The FTSE 100 has slipped back after its record breaking run of ten consecutive closing highs, and is currently down 0.22% at 7274.
Retailers have received a mixed reception to their Christmas updates, with Marks & Spencer and JD Sports moving sharply higher, but Tesco, Primark owner Associated British Foods and AO World all disappointing investors.
Stockbrokers Shore Capital are extremely unamused that Tesco, M&S, Debenhams, ASOS et al all decided to release their results today in a “chaotic” splurge.
They say:
The British retail trade has decided to make many market updates today.
Such dis-coordination, to put it politely, does not serve shareholders and investors well. Investor relations executives should hold their respective heads in shame at the chaotic volume of information coming out today whilst seeking for a more balanced information flow in 2018.
Updated
As feared, AO World’s cautious trading statement has gone down badly in the City.
Shares in the online electrical supplier have slumped by 8.7%, after it warned that the economic outlook is uncertain.
Conservative MP Margot James has applauded John Lewis and Marks & Spencer for their Christmas performance:
Congratulations to directors and staff at John Lewis for their excellent Xmas season results, also to M&S - great to see clothing sales up
— Margot James (@margot_james_mp) January 12, 2017
The Daily Mail’s Sabah Meddings tweets more details:
Strong results from John Lewis come with a warning staff bonuses will be lower due to tough trading...
— Sabah Meddings (@sabahmeddings) January 12, 2017
Waitrose will become 'more Waitrose' - says Sir Charlie Mayfield
— Sabah Meddings (@sabahmeddings) January 12, 2017
John Lewis: Bonuses will be down this year
As if we didn’t have enough to deal with, John Lewis has decided to put its Christmas trading figures out today too.
And it has warned its staff that their famous annual bonus is likely to be rather lower this year, even though sales and profits have risen.
Like-for-like sales at John Lewis stores rose by 2.7% in the six weeks to December 31, while Waitrose like-for-like sales were up 2.8%.
A successful promotional campaign, including one day only offers for Christmas staples, such as champagne and crackers, proved effective in building footfall in the pre-Christmas period.
Profits for the year to 28 January 2017 will probably be up on last year, thanks to lower pension charges. But JLP says that trading profits are under pressure, due to the boom in internet shopping and the fall in the pound.
The most obvious of these changes is the channel shift from shops to online.
The other major influence is pricing, where deflation continues in food and non-food, despite rising input costs as a result of weakness in the Sterling exchange rate.
These factors are significant for the outlook where we expect both inflationary cost pressures and competition to intensify in the market as a whole.
The rate of retail market sales growth may slow and the rate of profit growth that is achievable will be affected by margin pressure.
And staff are going to be hit in the pocket, when the bosses decide how much of the profits to share with them.
The Partnership Board will decide on the level of Bonus in March, but, given the challenging market outlook and the importance of investment for the future, the Board expects that bonus is likely to be significantly lower than last year.
Updated
Boom! Shares in JD Sports have hit a new all-time high, romping up by 6% to 346p.
That puts it top of the FTSE 250 index of medium-sized companies.
Traders are applauding the firm’s 10% jump in sales over Christmas
And finally, here are those smaller retailers...
Baby goods retailer Mothercare has reported a 1% jump in like-for-like sales in the last quarter, driven by online sales. More here.
Fashion chain SuperGroup says it had a good half-year, with revenues rising to £334.0m, from £254.7m. More here.
Top hat and tails purveyor Moss Bros has posted a 6% jump in like-for-like sales. CEO Brian Brick says “ongoing investment in new and refitted stores” is paying off. More here.
Dunelm, the homewares firm, had a solid but unspectacular festive period with like-for-like sales up 0.2%. More here.
No drama at food wholesale chain Booker Group; it’s on track to hit City forecasts this year.
ASOS boosted by slide in sterling.
Online fashion chain ASOS has reported bumper sales growth over Christmas, up 18% in the UK.
International sales surged by 52%, as ASOS benefits from the weak pound, and the company is now planning to upgrade its systems and processes to handle higher demand.
CEO Nick Beighton says:
“With sales for the year now expected to be up by c.25 percent to 30 percent, we’re accelerating our infrastructure investment to handle that growth.”
Asos posted strong results for the four months to 31 December. Total retail sales rose 36% to £605.7m, and revenues also rose 36%.
— Clodagh Rice (@ClodaghLRice) January 12, 2017
Tesco’s shares have fallen by 2.3% in early trading.
That making it the worst-performing member of the FTSE 100, even though it grew sales by 0.7% over Christmas.
Tesco is holding a conference call now, and saying it’s not seen any change in UK consumer spending since the EU referendum.
John Ibbotson of Retail Vision argues that Tesco’s results are encouraging:
“Tesco’s revival continues apace, with a strong Christmas trading period and third quarter.”More ominously for its competitors, Tesco has managed to increase its market share in a period of cut-throat competition.
Shares in M&S have jumped by almost 5% at the start of trading, as investors cheer its best festive performance for six years.
That’s makes it the best-performing share on the FTSE 100.
My colleague Zoe Wood explains:
Marks & Spencer has ended the long-running slump in sales at is clothing arm with its best Christmas performance for six years.
The retailer said like-for-like clothing sales were up by 2.3% in the 13 weeks to 31 December. This time last year clothing sales had slumped by nearly 6%.
M&S chief executive Steve Rowe said “better ranges, better availability and better prices” had helped it improve its performance in a difficult marketplace.
To win back shoppers, Rowe has already cut clothing prices and promised to pay more attention to its most loyal group of shoppers – fiftysomething women he has dubbed “Mrs M&S”. He also slashed the number of promotions run by the store.
More here:
Updated
Online electricals retailer AO World has dampened the mood, despite decent sales growth over Christmas.
AO says that it is cautious about trading conditions, due to
“the uncertain UK economic outlook, currency impacts on supplier pricing and the possible effect on consumer demand”
On the upside, total revenues in the three months to December 31 were up 12.3% year-on-year. But that may not be enough to cheer investors.
CEO John Roberts says:
Looking ahead we have three months left of the current financial year and are mindful of the uncertain economic outlook. However, we remain confident that our market leading proposition will continue to drive customers to experience the AO Way and enter the New Year excited by the opportunities ahead.”
AO World warns of uncertain end to year https://t.co/dYitTVH2qd
— fastFT (@fastFT) January 12, 2017
JD Sports has also reported strong sales and expects to beat City forecasts for profits in the current year.
It said the like-for-like growth of about 10% achieved in the first half had continued in the second half of its financial year to 7 January.
JD now expects that headline profit before tax and one-off items for the current financial year will exceed analysts’ expectations of £200m by up to 15%.
Peter Cowgill, executive chairman, said:
“Whilst we acknowledge that it would be unreasonable to expect like for like sales growth to be maintained at recent levels for a fifth consecutive year, we are confident that both domestically and internationally, our unique and often exclusive sports fashion premium brand offer provides a solid foundation for future development.”
The trading update did not mention the firm’s investigation into conditions at its Kingsway warehouse near Rochdale after a Channel 4 documentary found workers claiming it was “worse than a prison”.
City veteran David Buik reckons JD have outperformed Sports Direct.
Good numbers from JD Sport - eat your heart out Mike Ashley!
— David Buik (@truemagic68) January 12, 2017
Updated
City commentators are fairly impressed with the results of Retail Super Thursday.
Here’s ITV’s Chris Choi:
Looks like Tesco's fight-back is going well; and at last M&S clothing looking a bit more popular
— Chris Choi (@Chrisitv) January 12, 2017
The BBC’s Dominic O’Connell points out that M&S’s 2.3% jump in clothing/home sales are flattered by an extra week’s trading - take that out, and it only grew by 0.8%. Still growth, though!
Big result for Steve Rowe @marksandspencer - Christmas clothing sales up 0.8% once you take out extra days trading @BBCr4today
— Dominic O'Connell (@dominicoc) January 12, 2017
The BBC’s Emma Simpson flags up that Tesco is growing market share again, after a five-year haitus:
Tesco also says its grown its market share for the first time since 2011.
— Emma Simpson (@BBCEmmaSimpson) January 12, 2017
Resolution Group’s Duncan Weldon says the UK consumer seems to be in good spirits over Christmas:
Both M&S & Tesco like for like UK sales (and Morrisons yesterday) pointing to a relatively perky UK consumer.
— Duncan Weldon (@DuncanWeldon) January 12, 2017
In stores, Tesco served 266 customers every second during its peak trading period at lunchtime on Christmas eve
— Luke Tugby (@LukeTugby) January 12, 2017
Primark has a 'good' Christmas
Associated British Foods, the firm behind the Primark chain, says that trading across its business was “good” in the last 16 weeks.
However, we don’t have any like-for-like figures for Primark.
Total sales at Primark were up 11% year-on-year in ‘constant currency terms’, or a chunky 22% in actual currency terms (thanks to the fall in sterling).
ABF says:
The UK performed well. Like-for-like sales for the period were good and market share increased reflecting the strength of our consumer offering. Like-for-like sales for the group were held back by declines, albeit smaller than last year, in Germany and the Netherlands, the latter particularly affected by the rapid increase in selling space.
Primark numbers smash it again. +11% over Christmas, 22% if you take weaker Sterling. Plan to open over 1mn sq ft in current financial year
— Seamus Conwell (@SeamusConwell) January 12, 2017
Primark says Xmas trading was good - but no figures given
— Chris Choi (@Chrisitv) January 12, 2017
Debenhams: Christmas sales up 5%
Onto Debenhams...and it’s also beaten forecasts as customers clamoured for beauty products and gifts.
My colleague Julia Kollewe has taken a look, and reports:
Debenhams has reported better than expected Christmas trading. Like-for-like sales grew 5% in the seven weeks to 7 January and were up 1.7% at constant exchange rates.
Over the 18 weeks to 7 January, group like-for-like sales at constant exchange rates edged up 0.5%, with UK sales stronger, at 1% growth.
Analysts had expected a 1% drop in underlying sales.
The retailer said beauty and gift sales grew strongly to take the non-clothing sales mix to 57%. It has cut back on promotions overall but said it had a successful Black Friday.
Tesco: 3rd successful Christmas in a row
Tesco has also posted a decent-looking performance over Christmas, with a 0.7% rise in like-for-like sales in the UK - driven by sales of toys and clothes.
That’s despite not repeating last year’s loyalty card promotion which it said had hit performance by 0.8%.
Here’s the details:
- Food like-for-like sales up 1.3%, with significant market outperformance in fresh food
- Impact of minus 0.8% on total UK like-for-like sales from not repeating Clubcard ‘Boost’ promotion, leading to lower general merchandise sales
- Strong performance in clothing and toys, with sales up 4.3% and 8.5% respectively
CEO Dave Lewis says this is Tesco’s third successful Christmas in a row
We are very encouraged by the sustained strong progress that we are making across the Group. In the UK, we saw our eighth consecutive quarter of volume growth and delivered a third successful Christmas. Our fresh food ranges proved particularly popular, outperforming the market with great quality, innovative new products and even more affordable prices. Internationally, we have continued to focus on improving our offer for customers in challenging market conditions.
We are well-placed against the plans we shared in October to become more competitive for customers, simpler for colleagues, and an even better partner for our suppliers, whilst creating long-term value for our shareholders.
I would like to thank all of our colleagues for everything they have done to serve our customers brilliantly over this very busy period.”
Today’s results are a boost to Marks & Spencer’s new CEO, Steve Rowe, who recently announced a turnaround plan for the business centered on its food business.
Rowe says:
“I am pleased with the customer response we have seen to the changes we are making in line with our plan for the business. I would like to thank the whole team for their hard work over this busy period.
“In Clothing & Home, better ranges, better availability and better prices helped to improve our performance in a difficult marketplace. We also continued to substantially reduce discounting, including over Black Friday.
“Our Food business continues to grow market share with customers recognising our product as special and different. Our Simply Food store pipeline remains strong.”
Rowe warms, though, that consumer confidence remains “uncertain” in 2017.
Updated
Marks & Spencer beats forecasts
Marks & Spencer has beaten City forecasts, with sales growth across its food, clothing and homeware operations.
The high-street chain grew its like-for-like sales in the UK by 1.3%, led by a 2.3% jump in clothes and homeware.
That’s a welcome return to form for M&S, after years of underperformance in this area.
Can it be true M&S... clothing and home lfl +2.3%
— Zoe Wood (@zoewoodguardian) January 12, 2017
Food sales also did well, up 0.6% in a like-for-like basis (stripping out new stores).
Here’s the details:
And we’re off! A mass of trading news is flashing across the wires as all 12 retailers report their results to the City.
The agenda: Masses of Christmas trading news
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
They’re calling it Retail Super Thursday in the City.
No fewer than 12 of Britain’s shopping groups are reporting their financial results for the Christmas period this morning, giving a crucial insight into the UK economy.
The list includes several big names -- Marks & Spencer, Tesco and Debenhams, along with JD Sports, SuperGroup, Mothercare, Associated British Foods (the owner of Primark), Moss Bros, ASOS, Booker Group, Dunelm, and AO.com.
A huge number of retailers updating markets tomorrow: AO., ASC, ABF, BDEV, DEB, DNLM, MCLS, MKS, MTC, MOSB, SGP, TSCO
— Mike van Dulken (@Accendo_Mike) January 11, 2017
Veteran analyst Nick Bubb sighs:
“Super Thursday” is a nightmare for retail analysts with about a dozen Christmas trading announcements all coming out at once at 7am.
But it’s worth it, guys, to find out how Britain’s high street and e-commerce sector fared during the first festive period since the Brexit vote.
Also coming up....
There’s not much in the economic calendar today, apart from a report on German GDP in 2016 at 9am, eurozone industrial production figures at 10am, and the weekly US jobless report at 1.30pm.
Plus, traders will be watching to see if the FTSE 100 can extend its run of record highs....
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