September records slowest retail sales growth since shops reopened post pandemic

Published

2 years ago

October 7, 2022

admin

September saw the slowest retail sales growth since shops reopened post-COVID restrictions due to a combination of inflation, economic crisis and an uexpected bank holiday, figures show.

In-store and online sales increased by just 2.8% in September on last year, according to BDO’s High Street Sales Tracker (HSST).

It comes after a similar poor set of results in August, which was the previous lowest post-COVID performance for retail sales.

The month began with sales up 3.9% and peaked in the second week at 4.9%, before falling to 2.8% and 1.3% in the third and fourth weeks respectively.

The fourth week saw a bank holiday to mark the Queen’s funeral.

Fashion sales were up just 6.7% on last September, when retailers would normally expect shoppers to be spending on their autumn and winter wardrobes.

Lifestyle sales were up a meagre 1.2%, even lower than those recorded in August, which was the sector’s previous worst performance since stores reopened in February last year.

September also saw disappointing results for the homewares sector, where sales fell by 6.3%, thought to be a reflection of consumers postponing bigger purchases after spending significant sums refreshing their homes during COVID lockdowns.

‘The one bright spot’

Sophie Michael, head of retail and wholesale at BDO, said: “While the overall like-for-like is not quite going backwards across all discretionary spending categories, it’s clear that it’s trending downwards.

“In addition, with the pound’s current level against the US dollar and euro, retailers that rely on imports are paying more for their products, eating into already slim margins.

“The one bright spot is that with the pound’s weakness, the UK becomes an attractive destination for overseas tourists doing their Christmas shopping. However, this is unlikely to provide much of a boost to retailers beyond flagship stores in major cities.

“Retailers will need to focus on mitigating these impacts, by making operational savings wherever possible, and being very smart with their product purchasing, keeping it relevant and focused on their target customer, thereby limiting the risk of high stockholdings at the end of the season.

“However, with such turbulence in the wider economy, there is only so much that retailers can do to preserve their business and there is therefore no doubt that the sector needs to brace for a harsh winter ahead.”

Footfall figures

Meanwhile, the latest football figures from the British Retail Consortium (BRC)-Sensormatic IQ show total UK footfall was down 9.8% in September on three years previously – a comparison designed to avoid COVID-related fluctuations – a 2.6 percentage point improvement from August.

High streets saw an 11.9% drop, while shopping centre visits fell 22.7% compared to three years ago.

BRC chief executive Helen Dickinson said: “Footfall reached its highest level since the onset of the pandemic, coming within 10% of its pre-pandemic levels.

“These figures belie the collapse in consumer confidence which has resulted in falling sales volumes throughout the year. Meanwhile, soaring cost inflation is leading to upwards pressure on prices.”

Business

Energy price cap falls today but £600 lift to annual bills ahead, report warns

Published

4 hours ago

June 30, 2024

admin

Energy price cap falls today but £600 lift to annual bills ahead, report warns

As the latest reduction in the energy price cap takes effect, households are being warned of a big lift in bills ahead due to higher wholesale gas prices.

The cap, which limits what suppliers can charge per unit of energy, fell by 7% overnight in the wake of the latest three-month review by industry regulator Ofgem.

The reduction meant that typical 12-month bills will be around £500 cheaper than a year ago.

It left the average bill at £1,568 – a figure that will apply until the result of the next review takes effect in October.

However, a report by the Energy & Climate Intelligence Unit (ECIU) said on Monday that consumers should brace for an additional hit of up to £600 over the coming winter, largely due to higher wholesale prices.

It pointed to a possible £200 price cap hike from October on the back of some analyst calculations, suggesting it was plausible the total could remain around that level until June.

One calculation, by experts at Cornwall Insight and released on Friday, predicted a 10% – or £155 – increase from 1 October to £1,723 a year but said there remained uncertainty on the market path ahead.

Consumer groups say there is an alternative to the price cap, pointing to a growing number of fixed-rate deals on the market following a dearth of competition in recent years.

European wholesale costs are again elevated for the time of year based on pre-energy shock norms.

Recent pressures have included strong competition from Asia, particularly China, for liquefied natural gas (LNG).

That has replaced some of the Russian natural gas volumes that were stripped away in the wake of the invasion of Ukraine in February 2022.

A planned extension of the European Union’s sanctions regime against Russia will see its LNG exports targeted for the first time – potentially placing further pressure on supply across the continent.

👉 Click here to follow The Ian King Business Podcast wherever you get your podcasts 👈

UK household costs for both gas and electricity stood at an average of just below £1,090 ahead of the Russia-Ukraine war.

The ECIU report said: “By September 2025, the average household could have paid an extra £2,600 on energy bills during the ongoing gas crisis.

“With the government also spending £1,400 per home earlier in the crisis, the total extra costs could be £4,000 per home, and counting.”

Energy has been among the big battlegrounds of the election.

Much of the debate has centred on costs but the impact of gas use in particular has fuelled argument too on the UK’s climate commitments.

Dr Simon Cran-McGreehin, head of analysis at ECIU, said: “The UK’s high dependence on gas for electricity generation and heating has cost bill payers £2,000 so far during the gas crisis and the economy as a whole tens of billions of pounds.

“Common sense measures like investing in insulating the poorest homes, switching to electric heat pumps and fast-tracking British renewables will leave us less vulnerable to the whims of the international gas markets.

“North Sea gas output is declining so unless we make the switch we’ll be ever more dependent on foreign imports.

“The maths is clear, when it comes to energy independence, new drilling licences are a side show making a marginal difference compared to the immense quantity of homegrown energy that offshore wind and other renewables can generate.”

Emily Seymour, the editor of Which? Energy, said: “Consumers will be relieved to hear that the price cap is dropping by around £122 for the typical household from 1st July.”

She added: “With the price cap predicted to rise again in October, many consumers will also be wondering whether to fix their energy deal.

“There’s no ‘one size fits all’ approach but the first step is to compare your monthly payments on the price cap to any fixed deals to see what the best option is for you.

“As a rule of thumb, if you want to fix, we’d recommend looking for deals as close to the July price cap as possible, not longer than 12 months and without significant exit fees.”

Business

Boots chief James to run ophthalmology chain Veonet

Published

17 hours ago

June 30, 2024

admin

Boots chief James to run ophthalmology chain Veonet

The outgoing boss of Boots is leaving to run Veonet, one of Europe’s largest chains of ophthalmology clinics.

Sky News has learnt that Sebastian James is to become the new group chief executive of Veonet, which is owned by the private equity firm PAI Partners and Canada’s Ontario Teachers Pension Plan.

He will leave Boots in November, as Sky News revealed on Saturday, and will join Veonet soon afterwards, insiders said.

Veonet was acquired by its current owners in early 2022 from Nordic Capital, another buyout firm.

In the UK, Veonet owns SpaMedica, which performs eye operations such as cataract removals for the NHS.

Overall, the group provides eye care services to more than 2m patients annually across five European markets, including Germany, the Netherlands and Spain.

Dr Markus Hamm, the current Veonet CEO, is retiring but will remain on its board.

Mr James is leaving Boots after its parent, Walgreens Boots Alliance, abandoned plans to sell or float the pharmacy chain for a second time in two years.

His departure will come during the retailer’s 175th anniversary year.

An announcement about his exit from Boots and appointment at Veonet is expected to be made early this week.

Veonet could not be reached for comment, while both PAI and OTPP declined to comment.

Business

Boots chief James quits after owner’s £5bn sale plan stalls

Published

2 days ago

June 29, 2024

admin

Boots chief James quits after owner's £5bn sale plan stalls

The chief executive of Boots, Britain’s biggest high street pharmacy chain, is quitting after its owner’s plans for a £5bn sale or stock market listing stalled.

Sky News has learnt that Sebastian James, who has run Boots since 2018, will leave the company in November.

City sources said this weekend that he had accepted a new role in the healthcare industry.

Money blog: How to split housework fairly

His exit comes soon after it emerged that New York-listed Walgreens Boots Alliance (WBA), the British retailer’s owner, had decided for the second time in two years against pursuing a sale or stock market flotation of the chain.

An announcement about Mr James’s departure is expected in the coming days.

WBA is not yet thought to have lined up a successor.

Mr James, who previously ran the electricals retailer Dixons (now named Currys), recently endorsed Sir Keir Starmer – a notable move because of his long friendship with Lord Cameron, the foreign secretary.

His departure from Boots will come during the Nottingham-based company’s 175th year.

Boots employs about 52,000 people and trades from roughly 1,900 stores.

Its recent trading performance has been strong, with WBA this week saying that like-for-like sales at Boots during the quarter to the end of May rose by 6% and 5.8% across its retail and pharmacy operations respectively.

An insider said Mr James had overseen a successful turnaround, with market share having grown for 13 successive quarters.

It has been a rare bright spot for WBA, which has had a torrid time and has seen its shares slump.

A WBA spokesperson said this week: “As Walgreens Boots Alliance continues a strategic review of the Company’s assets, we took a critical look at Boots.

“While we believe there is significant interest in this business at the right time, Boots’ growth, strategic strength and cashflow remain key contributors to Walgreens Boots Alliance.

“We are committed to continuing to invest in Boots UK and to find innovative ways for this business to fulfill its potential.”

During a previous auction in 2022, only one bidder – a consortium of Apollo Global Management and Reliance Industries – tabling a formal offer worth about £5.5bn.

However, growing concerns about the global economy had triggered severe doubts among large banks which help finance leveraged buyouts, with Boots among the biggest such deals in Europe.

Among the other challenges facing prospective acquirers at the time was finding an adequate solution for Boots’ £8bn pension scheme – one of the largest private retirement funds in the UK.

This issue has now been resolved through an insurance deal struck with Legal & General.

Like many retailers, Boots had a turbulent pandemic, announcing 4,000 job cuts in 2020 as a consequence of a restructuring of its Nottingham head office and store management teams.

Shortly before the COVID pandemic, Boots earmarked about 200 of its UK stores for closure, a reflection of changing shopping habits.

Boots’ heritage dates back to John Boot opening a herbal remedies store in Nottingham in 1849.

It opened its 1000th UK store in 1933.

In 2006, Boots merged with Alliance Unichem, a drug wholesaler, with the buyout firm KKR acquiring the combined group in an £11bn deal the following year.

In 2012, Walgreens acquired a 45% stake in Alliance Boots, completing its buyout of the business two years later.

Boots declined to comment on Mr James’s exit on Saturday.