BUSINESS LIVE: Retail Sales Down; Deliveroo ups guidance; Delay in demand for DFS

The Currys boss has criticized the government for imposing extra costs and red tape on businesses, which will drive up prices.

As the country’s biggest electrical goods retailer reported a fall in Christmas sales, chief executive Alex Baldock warned: ‘The biggest inflationary pressures are coming from the government.’

Michael Field, European market strategist at Morningstar:

‘UK retail sales in 2023 ultimately proved to be a disappointment. While the sales increase in November gave us hope, it was quickly dashed in December, with the largest monthly decline since the pandemic.

‘This is something that will undoubtedly shock the markets.

‘This has completely changed the picture for 2023, with retail sales now down 2.4% over that period. This is not a great result, and despite GDP being positive over the same period, it is a clear sign that the UK economy is struggling.

‘Non-food sales fell more, by almost 4% in December, a clear sign that consumers are cutting back on non-essential items.

‘British mortgage rates are falling, but are at a very high level. BBA rates are still close to 8%, putting further pressure on household incomes. The effect of higher interest rates is still filtering through the economy. Unfortunately, this means retailers could be in for more pain in 2024.”

DFS Furniture experienced a 9.1 percent year-on-year volume contraction in the second half of 2023, with the retailer blaming “record warm weather in September and early October, when footfall and demand appeared to be particularly weak.”

However, the group told shareholders that demand has since recovered and expects full-year profit expectations to be met.

‘The Group performed well under difficult market conditions.

“Despite the weaker than expected market, good operating performance, progress on gross margins and lowering our cost base enabled us to achieve first half profit slightly ahead of the previous year, and we continue to on track to achieve our full year. profit target.

“Looking ahead, the Group has good growth prospects and is well positioned to generate attractive returns for shareholders, capitalize on the market recovery, expand our housing offering and achieve our PBT target of 8 percent.”

The ousted boss of Endeavor Mining has been stripped of more than £20 million in wages just weeks after being sacked for serious misconduct.

Sebastien de Montessus, who had led the gold miner since 2016, was sacked earlier this month following an investigation into two separate incidents, including an irregular payment of £5m related to the sale of company assets and allegations about his personal conduct.

Deliveroo expects 2023 revenues to be ‘slightly’ higher than the £60 million to £80 million forecast in previous guidance, with the total value of orders on its platform increasing by 3 percent.

Founder and CEO Will Shu said the company delivered strong performance in the UK and Ireland in the fourth quarter, and its international business has returned to growth.

“As we saw continued signs of stabilization in consumer behavior this quarter, we continued to invest in the consumer value proposition to lay the foundation for future growth,” he said.

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club:

“Retail sales volumes ended the year negative, recording the largest monthly decline since January 2021.

‘Partly this is because British consumers did their Christmas shopping early this year. Nevertheless, the decline in December was much worse than expected, suggesting that pressure on British consumers may be increasing.

‘The results of retailers themselves during Christmas give a very mixed picture. The supermarkets did reasonably well, as did Next and M&S.

‘But the sales of JD Sports and Superdry, among others, are very disappointing. This suggests that British consumers are becoming more choosy about where they spend their money.

Whether December’s weak retail sales are a blip or the start of a more worrying trend remains to be seen. But one thing is certain: despite the optimism surrounding interest rate cuts, the British economy is certainly not out of the woods yet.’

Deepfake videos and massive job losses have left the shadow of artificial intelligence hanging over Davos.

The Swiss mountain resort, where global elites are staying at the World Economic Forum, was dominated this week by the opportunities and dangers of AI.

Many hope this will bring a golden age of life-saving scientific advances – and higher profits.

Jacqui Baker, head of retail at RSM UK:

‘After a slight increase in November, we saw the biggest drop this year in December, marking a shocking end to the Golden Quarter. Black Friday tempted some consumers to bring forward their spending to November, but continued cost-of-living pressures forced most households across all retail categories to cut back.

‘This meant retailers were forced to extend their deep discounts through December to shift stock, which will have been a major blow to margins.

‘Last year was a challenge for retailers and unfortunately this looks set to continue into 2024. Despite rising consumer confidence and increases in real wages, inflation fell slightly in December, showing how vulnerable the economy is.

‘On the whole, things are slowly improving, but consumers will probably only feel like they have more money in their pockets in the summer. After a challenging year, another six months of tough trading could be too long for some retailers.

‘To compound the problem and hit retailers when they are in trouble, disruptions from events in the Red Sea and the potential for cost increases and delivery delays could be another headwind they face this year.

‘This could be especially damaging to fast fashion which relies on speed to deliver the latest trends at the right price.’

Retail sales fell 3.2 percent in December from November, marking the biggest fall in almost three years, new data from the Office for National Statistics showed.

Economists had forecast a decline of 0.5 percent and the disappointing figures could risk a contraction in the British economy for the fourth quarter.

The ONS said fourth-quarter retail sales are likely to subtract 0.04 percentage points from UK economic output.

“Food stores performed very poorly, with their steepest decline since May 2021, as early Christmas shopping led to sluggish sales in December,” said Heather Bovill, deputy director for surveys and economic indicators at the ONS.