‘Lacklustre’ January for retailers with bad weather and cost of living pressures blamed

Published

3 months ago

February 6, 2024

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Retailers suffered a “lacklustre” January as bad weather and cost of living pressures discouraged shoppers from opening their wallets after Christmas, according to new research.

Total retail sales across the UK increased by only 1.2% year-on-year in January – down sharply from growth of 4.2% during the same period last year, figures from the British Retail Consortium (BRC) and KPMG said.

Separate figures from Barclaycard also found year-on-year consumer card spending grew by just 3.1% over the same month.

It blamed the recent cold weather – including from Storm Isha and Storm Jocelyn – for putting off shoppers from visiting high streets, and claimed Britons were instead “embracing nights in” by watching TV hits such as The Traitors.

The BRC said January sales discounting helped boost spending in the first two weeks of the post-Christmas period, but added the trend was “not sustain[ed] throughout the month”.

Chief executive Helen Dickinson said: “Larger purchases, such as furniture, household appliances, and electricals, remained weak as the higher cost of living continued into its third year.”

Clothing and footwear sales also performed poorly, although there was an upward trend for health and beauty products, she added.

Linda Ellett, KPMG’s UK head of consumer markets, leisure and retail, described the high street’s performance as “lacklustre” and said the “feel-good factor” from falling mortgage rates and easing inflation had yet to materialise at the tills.

She said: “It may be a new year, but the hangover of low consumer confidence remains.

“The extraordinary weather conditions across large parts of the country did little to encourage shoppers out on to the high street, whilst continued industrial action on the rail network was unhelpful for city centre locations.”

It comes after official figures showed a shock fall in retail sales during the key December shopping period, despite some positive reports by major high street outfits in the run-up to Christmas.

Shelter from the storms

Barclaycard said its below-inflation growth figures suggested “Brits stayed at home to shelter from the cold weather and save money after a busy festive period”.

It said spending on takeaways and fast food was up 5.5% year-on-year in January, with people spending £55 each on average, while household expenses on digital content and subscriptions increased by 11.4%.

Nearly half of 2,000 consumers polled on behalf of Barclaycard said they were using loyalty schemes or vouchers to get money off shopping, while 43% said they plan to cut down on non-essential spending due to rising bills.

But the poll also found 70% have confidence in their household finances – the highest level in its monthly survey since November 2021.

Karen Johnson, head of retail at Barclays, said: “Brits took on a more frugal approach in January, choosing to stay at home more often to save money and shelter from the winter weather.

“This meant that online retail performed strongly, as shoppers browsed the sales from the comfort of their sofas, while demand for digital content and takeaways remained robust, boosted by the release of popular new film and TV releases such as The Traitors and Fool Me Once.

“While this shift in behaviour resulted in subdued growth for hospitality and leisure, it’s encouraging that confidence is improving, with consumers remaining resilient and finding savvy ways to manage their finances.”

Jack Meaning, chief UK economist at Barclays, added: “Increasing consumer confidence is a positive message for the UK outlook in 2024, as we see inflation continue to fall, real incomes rising and growing signs that interest rate cuts are coming.

“Spending looks to be on an upward trajectory”.

Looming election

The figures came as the BRC’s Ms Dickinson said she hoped the “next government” could improve the outlook for businesses.

Opinion polls suggest the Labour Party is on course to win the next general election, which many commentators expect will be held this autumn.

Ms Dickinson said: “With the spring budget in sight, and a general election looming, government cannot afford to ignore the needs of retailers and their customers.

“Employing three million people and supporting families and communities in every corner of the country, retail is the ‘everywhere economy’.

“By addressing the cumulative burdens, from business rates’ rises, to ill-conceived new recycling proposals to border control costs, the next government can unlock retail investment and boost local and national economic growth.”

Business

Marks & Spencer’s website and app go down

Published

8 hours ago

May 18, 2024

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Marks & Spencer's website and app go down

Marks & Spencer’s website and app has not been working for several hours, with a message telling shoppers “you can’t shop with us right now”.

“We’re working hard to be back online as soon as possible,” it adds.

All the menus and images have disappeared apart from one showing a model in a green jacket.

Customers trying to use the app got the message: “Sorry you can’t shop through the app right now. We’re busy making some planned changes, but will be back soon.”

The site is understood to have been down for several hours.

Replying to one customer on X, the retailer said: “We’re experiencing some technical issues but we are working on it.”

M&S is the latest high street name to have technical issues – last month some Sainsbury’s shoppers had problems with their online orders.

The outage comes a few days before M&S is expected to reveal a big jump in annual profits.

It’s been a successful year for the brand, with strong sales across the business following a turnaround plan that has included store closures and cost cutting.

Business

Employees at fintech giant Revolut to cash in with $500m share sale

Published

12 hours ago

May 18, 2024

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Employees at fintech giant Revolut to cash in with 0m share sale

Bosses at Revolut, Britain’s biggest fintech, are drawing up plans to allow employees to cash in with a sale of stock valued at hundreds of millions of pounds.

Sky News has learnt that the banking and payments services provider is lining up investment bankers to coordinate a secondary share sale worth in the region of $500m (£394m).

Morgan Stanley, the Wall Street bank, is expected to be engaged to work on the proposed stock offering, which will take place later this year.

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City sources said this weekend that Nik Storonsky, Revolut’s co-founder and chief executive, was determined to seek a valuation of at least the $33bn (£26bn) it secured in a primary funding round in 2021.

“This will not be a down-round,” said one person familiar with Revolut’s thinking.

Although the fintech, which has more than 40 million customers, is not planning to raise new capital as part of the transaction, any sizeable share sale will still be closely watched across the global fintech sector.

It is expected to be restricted to company employees.

Revolut ranks among the world’s largest financial technology businesses, with revenue virtually doubling last year to around £1.7bn, according to figures expected to be published in the coming months.

Founded in 2015, it has experienced a string of regulatory and compliance challenges, with reports last year highlighting its release of funds from accounts flagged by the National Crime Agency as suspicious.

The company’s growth has taken place at breakneck speed, with customer numbers soaring from 16.4m at the point of the Series E fundraising nearly three years ago.

Insiders argued that despite the protracted downturn in tech valuations over the last two years, Revolut’s relentless expansion would easily justify it maintaining its status as Britain’s most valuable fintech.

Monzo, the UK-based digital bank, recently confirmed a Sky News story that it had closed a funding round worth nearly £500m, including backing from an arm of Google’s owner, Alphabet, and a Singaporean sovereign wealth fund.

Elsewhere, however, the funding landscape has been bleaker, with a growing number of tech companies which had attracted unicorn valuations of more than $1bn now struggling to stay afloat.

Revolut has allotted stock options to many of its 10,000 employees as part of their compensation packages, although it was unclear how many would be eligible to dispose of equity in the transaction later this year.

A source close to the company said it had had numerous expressions of interest from prospective investors.

Revolut’s current shareholders include SoftBank’s Vision Fund and Tiger Global.

News of the proposed share sale comes as Revolut’s investors continue to await positive news about its application for a UK banking licence.

The company applied to regulators to become a bank in Britain more than three years ago, but has so far failed to secure approval.

Mr Storonsky has been publicly critical of the delay, and last year questioned the approach of British regulators and politicians, as he suggested that he would not contemplate a listing on the London Stock Exchange.

An initial public offering of Revolut appears to still be some way off, although it would not surprise investors or industry peers if it initiated a listing process in the next couple of years.

One person close to Revolut said board members were among those expected to participate in the secondary share sale, although further details were unclear this weekend.

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The company is chaired by Martin Gilbert, the City veteran who has faced governance and performance challenges at Assetco, the London-listed asset manager he runs.

Its other directors include Michael Sherwood, the former Goldman Sachs executive who was jointly responsible for its operations outside the US and who was regarded as one of the most skilled traders of his generation.

An external shareholder in the company said the exclusion of non-employees from the deal could draw criticism from some investors.

Revolut has conducted secondary share sales of this kind in the past, including after its 2021 Series E round.

This weekend, Revolut declined to comment.

Business

Ex-Post Office head of IT says Paula Vennells ‘hoped to avoid’ inquiry – and reveals she blocked her number

Published

2 days ago

May 16, 2024

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Ex-Post Office head of IT says Paula Vennells 'hoped to avoid' inquiry - and reveals she blocked her number

A former Post Office executive has said she was forced to block ex-boss Paula Vennells’ phone number after the ex-CEO called multiple times asking for help to avoid an independent inquiry into the Horizon IT scandal.

Lesley Sewell, previously the company’s head of IT, told the Post Office inquiry on Thursday that former CEO Ms Vennells had reached out to her four times between 2020 and 2021.

Ms Sewell said that she blocked Ms Vennells’ number due to discomfort with the contact.

In her witness statement to the probe, Ms Sewell said that one of Ms Vennells’ emails referenced the need to fill in memory gaps regarding Horizon and “Project Sparrow”, a committee addressing issues with forensic accountants who identified flaws in the accounting system.

“Paula contacted me on four occasions in total. I recall blocking her number after the last call as I did not feel comfortable with her contacting me,” Ms Sewell said.

“I had not spoken to Paula since I had left POL [Post Office Limited] in 2015.”

According to Ms Sewell’s testimony, former chief executive Ms Vennells said that she had “been asked at short notice” to appear before a parliamentary select committee on “all things Horizon/Sparrow and need to plug some memory gaps”.

Ms Sewell says Ms Vennells added: “My hope is this might help avoid an independent inquiry but to do so, I need to be well prepared.”

Ms Sewell, who struggled to contain her emotions and broke down in tears while giving her oath at the start of her inquiry evidence, was offered support and breaks as needed by chairman Sir Wyn Williams.

Sir Wyn told the former executive: “Ms Sewell, I appreciate this may be upsetting for you, Ms Price will ask you a number of questions in a proper and sensible manner, but if at any time you feel you need a break, just let me know, all right?”

The Post Office has faced significant scrutiny following the ITV drama Mr Bates Vs The Post Office which highlighted the Horizon IT scandal.

The faulty system led to the prosecution of more than 700 sub-postmasters between 1999 and 2015, with many still awaiting full compensation despite government announcements regarding payouts for those with quashed convictions.