MARKET REPORT: High Street is back in fashion as retail sales rise
Retailers led the London stock market higher after the High Street showed signs of life.
Amid Jeremy Hunt’s grim and gloomy fall statement, official figures show retail sales rose 0.6% last month.
This follows a 1.5% drop in September, when many shops closed on the day of the Queen’s funeral.
Best step forward: Amid Jeremy Hunt’s grim and gloomy fall statement, official figures show retail sales rose 0.6% last month
It was a stronger-than-expected recovery, and although sales were still below pre-pandemic levels, with rising prices eating away at family budgets, sector shares rose.
Sports Direct owner Frasers Group, whose brands also include House of Fraser, Flannels and Jack Wills, rose 5.9%, or 46p, to 823p, while JD Sports rose 4.3%, or 5p, to 119.6p and B&Q and Screwfix parent Kingfisher gained 3.4%, or 8.1p, to 246p.
Rising retail sales – and share prices – provided much-needed respite after the Chancellor announced £55billion in tax hikes and spending cuts and warned that Britain was already in recession. But it wasn’t all good news on the retail front. Online fashion chain Asos fell 2.6%, or 18.5p, to 703.5p after analysts at Stifel gave it a ‘sell’ rating.
With the FIFA World Cup kicking off this weekend, Stifel said the UK retail sector should benefit from increased food and drink sales.
However, he estimates spending will be around 40 per cent lower than last year’s European Championships due to the winter tournament schedule and pressure on living standards from skyrocketing inflation. He also warned that England might not do as well this time around, having reached the Euros final.
AJ Bell financial analyst Danni Hewson also struck a cautious tone, saying: “October is supposed to be the start of the golden quarter for retailers, the time when they decorate the lobbies and ring the tills. ” But retailers are unlikely to feel the holiday cheer at this time and with the recession already upon us, it seems unlikely that we will see a similar increase in sales over the next few months.
“Even the imminent arrival of Black Friday should not generate huge revenues. People will look for bargains, but they will have a clear idea of what they want to buy and how much they can afford to spend. Squeezing budgets means they’re less likely to be attracted to shiny deals if they don’t hit the mark.
At Marks & Spencer, shares rose 2.3%, or 2.9p, to 123.5p after the retail giant announced a new chief financial officer.
Jeremy Townsend, who held the same position with blue-chip pest control firm Rentokil, will join next Tuesday.
Meanwhile, SSP, owner of Upper Crust and Caffe Ritazza, fell 1.3%, or 2.7p, to 208.2p after UBS slashed the airport deli’s target price to 325p versus 355p.
In the broader market, the FTSE 100 rose 0.53%, or 38.98 points, to 7,385.52, while the FTSE 250 rose 0.84%, or 160.74 points, to 19,283.05.
MJ Gleeson fell 5.1%, or 19p, to 355p after becoming the latest homebuilder to see an increase in cancellations and a slowdown in demand since the Kwasi Kwarteng mini budget in September.
The number of homes booked by customers at each of its Gleeson Homes sites has increased from 0.42 a year ago to 0.26 in the past six weeks, he said.
Cancellation rates over the same period soared to 41% from 20% in the first ten weeks of the year.
In the latest boardroom shakeup, packaging giant DS Smith rose 0.6%, or 1.9p, to 306.4p after poaching Biffa’s finance boss.
Richard Pike, who held the same position with the waste management business for four years, will join DS Smith next year. Biffa rose 0.10%, or 0.4p, to 407.2p.
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