Sunday 8 December 2019

M&S festive sales slump hits retail stocks

The FTSE 100 Index managed a fresh record high, rising 14.43 points to 7,762.94.

Marks and Spencer on Oxford Street in London (PA)
Marks and Spencer on Oxford Street in London (PA)

By Ben Woods, Press Association Chief City Correspondent

The Christmas sparkle came off retail stocks on Thursday after Marks & Spencer served up a turkey by posting steep falls in food and clothing sales.

M&S was the biggest faller on the top flight, as it pinned the blame on mild October weather for a 2.8% fall in like-for-like clothing and home sales during the 13 weeks to December 30.

Shares were down 22.8p to 301.2p, as the retailer’s woes were compounded by a 0.4% sales drop at its food arm.

Next and Primark-owner Associated British Foods also fell foul of wider sell-off of retail stocks – down 77p to 4,963p and 23p to 2,818p respectively – but the FTSE 100 Index still managed a fresh record high, rising 14.43 points to 7,762.94.

Fiona Cincotta, analyst at City Index, said: “Retailers were out of favour throughout the day, following disappointing numbers from Marks & Spencer.

“Prior to the releases, expectations had been running high; only earlier this week Morrisons and Sainsbury impressed investors with better than expected sales figures over the crucial Christmas period.”

Across Europe, the Cac 40 in France was 0.3% lower and Germany’s Dax was down by 0.6%.

On the currency markets, the pound enjoyed a lift at the expense of the US dollar’s weakness, pushing 0.2% higher at 1.353.

However, sterling was enduring a rockier ride against the euro, slipping 0.5% to 1.124.

The price of oil was teetering close to the 70 US dollar mark in response to official data pointing to a fall in US production and crude inventories.

Brent crude surged 1%, or 69 cents, to 69.76 US dollars a barrel at the time of the London market close.

In UK stocks, Tesco was among the biggest fallers despite reporting a solid rise in sales over the critical Christmas trading period.

The supermarket giant said UK like-for-like sales rose by 1.9% in the six weeks to January 6, driven by a strong grocery performance.

The four weeks leading up to Christmas Day delivered record sales and volumes in the UK, which helped it notch up a 2.3% rise in third quarter comparable sales.

But the figures fell short of analysts’ expectations, leading Tesco shares to tumble more than 4%, or 9.6p to 202.3p.

Supermarkets Morrisons and Sainsbury’s also suffered in the wake of the slump, drifting down 3.3p to 226.2p and 5.3p to 248.6p respectively.

Britain’s biggest housebuilder Barratt Developments had a disappointing day’s trading after being hit with a broker downgrade from Peel Hunt.

It came as the firm posted a trading update, where it chalked up a “strong” half-year performance thanks to a rise in forward sales and completed homes.

Total forward sales picked up by 2% to £2.4 billion for the six months ending in December, as it cheered Government policies such as Help to Buy and the buoyant mortgage market.

The number of completions also ticked higher, lifting 2% to 7,324 over the period, with the average selling price climbing 6.5% to £281,000. Shares closed down 17.2p to 617p.

In a contrast of fortunes, takeaway firm Just Eat enjoyed a stellar session, finishing the day as the biggest riser following a broker upgrade from Barclays. Shares were up 36.2p to 803.8p.

The biggest risers on the FTSE 100 Index were Just Eat up 36.2p to 803.8p, easyJet up 57.5p to 1,536.5p, Anglo American up 60.6p to 1,761p, Bunzl up 45p to 2,050p.

The biggest fallers were Marks & Spencer down 22.8p to 301.2p, Tesco down 9.6p to 202.3p, Barratt Developments down 17.2p to 617p, Barclays down 5.1p to 196.1p.

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