Strong Christmas sales appears to be a rising tide that lifted all of the UK’s supermarkets with Tesco and M&S also reporting strong sales. Importantly, however, they stopped short of raising guidance, signaling a note of caution amid a better-than-expected festive period. That caution is underlined by falling sales in Asos and a grim outlook for homebuilder Persimmon.
(Bloomberg) — Strong Christmas sales appears to be a rising tide that lifted all of the UK’s supermarkets with Tesco and M&S also reporting strong sales. Importantly, however, they stopped short of raising guidance, signaling a note of caution amid a better-than-expected festive period. That caution is underlined by falling sales in Asos and a grim outlook for homebuilder Persimmon.
Here’s the key business news from London this morning:
In The City
Tesco Plc: Britain’s largest grocer reported a 7.8% increase in sales in the UK and Ireland over the Christmas period, despite their third-quarter like-for-like sales missing expectations.
Marks & Spencer Group Plc: The retailer said given the impact of inflation on its customers and business it is taking steps to “structurally reduce costs” and “reinforce our customer proposition.”
- M&S Food offering outperformed the market on “volume and value” over Christmas, while the company said its clothing and home range delivered an “outstanding performance”
Asos Plc: The online fashion company said sales in the UK fell 8% in the final four months of the year, reflecting the “weak consumer sentiment”.
- It blamed the “national newsflow” for a fall in sales in September, and delivery disruption for tougher sales in December
Persimmon Plc: The UK’s biggest homebuilder completed more homes than analysts expected, but delivered a note of caution for the year ahead.
- It said customer behavior began to change in the second half of the year and gathered pace in the fourth quarter — and it expected the mix of higher mortgage rates, inflation, heightened market uncertainty and the end of Help to Buy in England to impact its year ahead
In Westminster
Some 100,000 UK civil servants announced plans to strike next month after health care and rail unions signaled they’re far from resolving their disputes with employers and the government, piling further pressure on Rishi Sunak’s administration. That’s as trains on London’s £20 billion Elizabeth Line will mostly come to a halt today as workers walk out over pay and pensions.
In Case You Missed It
Britain’s markets watchdog has warned of potential “systemic defaults” among wholesale brokers in the City of London that may be unfit to weather sudden shocks and longer periods of stress.
Meanwhile, an increasing number of the UK’s financial services firms expect a rise in loan defaults in the next three months, the latest reminder of a gloomy economic outlook.
This year is off to a sobering start as bankers keep tabs on who is losing their job. In this week’s In the City podcast, hosts David Merritt and Francine Lacqua explore the question of whether this is just the beginning of a broader retrenchment across the financial industry. Listen here:
Looking Ahead
Taylor Wimpey Plc’s trading update will round out the earnings week tomorrow. The company was among the UK homebuilders flashing warning signs about the country’s housing market last year, with the cancellation rate for its homes rising to 24% in the second half of 2022 from 14% a year earlier. The key catalysts to watch this year include the Bank of England’s benchmark rate peaking closer to 4% than 5% and the appeal of new homes rising on better energy efficiency, according to Bloomberg Intelligence analyst Iwona Hovenko.
For a more considered take on the UK’s economic and financial news, sign up to Money Distilled with John Stepek.
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