Top story

Team GB’s Olympic gold rush and clear blue skies in August have helped food retailers put in their best performance for more than two years.

Total food sales increased 0.9% – on a three-month basis – as consumers enjoyed the summer weather with picnics and Brazilian-themed barbeques, according to the latest BRC-KPMG retail sales monitor.

Shoppers reaching for the bubbly to celebrate a record medal haul by UK athletes at the Rio Olympics also helped buoy the sector.

However, the sunny weather and the Olympics wasn’t good news for the wider retail sector as total sales on the high street fell 0.3% in August – the weakest performance since September 2014. Like-for-like sales were also down 0.9%.

British Retail Consortium CEO Helen Dickinson said: “A month of extraordinary achievement for Team GB certainly produced a feel-good effect and consumer confidence was up on July, but that generally didn’t translate into extra sales. Consumers were enticed towards leisure and outdoor activities rather than shopping, although food did post its strongest performance in more than two years; fuelled by demand for picnic, barbeque supplies and celebratory drinks.”

KPMG head of retail David McCorquodale added that sales of women’s fashions performed particularly poorly, despite widespread promotions.

“The warmer weather made it almost too hot to shop and dissuaded shoppers from looking at the newly arrived autumn products. Despite this, jewellery sales continued to benefit from international shoppers taking advantage of the weaker pound.

“Whilst for those at home, some of whom may have opted for a staycation given the exchange rate, the warmer weather put wine and barbeques firmly on the menu – much to the delight of food and drinks sellers.”

IGD chief executive Joanne Denney-Finch said: “A strong August for sales under mainly blue skies completed a good summer for grocery retailers, with the best underlying three-month growth for more than two years.

“Although 51 per cent of shoppers feel that the next 12 months is a time for them to play it safe in financial terms, this does not seem to be curtailing overall spending on everyday items like food and groceries.”

Morning update

Petrol forecourt retailer Applegreen (APGN) has boosted profits in the first half thanks to strong growth in like-for-like food sales. Revenues in the six months ended 30 June increased 7.4% to €556m as Applegreen reported robust like-for-like growth in the Republic of Ireland, where it has the majority of its sites. Its estate grew from 200 sites as at 31 December to 220 at the period end, with a strong pipeline of new sites particularly in UK. It also opened 17 new food outlets, including the launch of a new food offering – Freshii.

The retailer said like-for-like growth in gross profit at constant currency of 5.5% was mainly driven by 13.4% increase in like-for-like food sales at constant currency. Adjusted EBITDA increased by 15% to €13m in the half and adjusted pre-tax profits were up 39% to €8m.

CEO Bob Etchingham said: “Growth was particularly strong in the Republic of Ireland where our service areas and recent upgrades are well positioned to capture the demand from positive consumer sentiment. In the UK, a more competitive environment impacted growth in the early part of the year and while this abated, we also noted a more cautious consumer in advance of the Brexit vote.

“The decision by the UK public to exit the EU took place in late June so had no significant impact on the figures for the six months. Looking to the future, the lower sterling/euro exchange rate will obviously impact on our consolidated figures but otherwise it is too early to assess what impact the decision will have on our business.”

He added that trading since the end of June had been positive and had shown improvement particularly in the UK. Shares in the business are up 1.4% this morning to 393p.

Elsewhere, the FTSE 100 opened 0.1% down at 6,875.21 points. Other early fallers include Unilever (ULVR), Imperial Brands and Reckitt Benckiser (RB), all down less than 1%.

Yesterday in the City

Morrisons (MRW) shares leapt more than 1% to 199.4p after it struck first in what could be a new front in the supermarket price war. The retailer is cutting the prices of 130 meat and 30 produce lines by about 12%, following the recent announcement that it was slashing the cost of more than 1,000 products

Tesco (TSCO) was an immediate loser as investors worried how it would be affected by a cheaper Morrisons. Shares in the UK’s biggest supermarket fell 1.3% to 169.4p. Sainsbury’s (SBRY) was left more or less unaffected with the share price flat at 246.2p.

Marks & Spencer (MKS) had another difficult day with shares falling 1.3% to 349.5p after it confirmed it planned to cull more than 500 head office roles as it seeks to end the protracted period of plunging sales. The share price is down 23% so far this year.

CARR’s Group was one of yesterday’s big winners as the £36m sales of food division Carr’s Flour Mills to fellow flour miller Whitworths sent shares soaring 11% to 161p.

Finsbury Food (FIF) also rose 1.9% to 129.2p, Fever-Tree (FEVR) was up 1.5% to 1,014.1p and WH Smith (SMWH) climbed 1.1% to 1,607p.

Fallers included Cranswick (CWK), down 2.4% to 2,296p, Imperial Brands (IMB), down 1.8% to 4,057p and Coca-Cola HBC (CCH), down 1.7% to 1,666p.

The FTSE 100 started the new week 0.2% (15 points) in the red at 6,870.42 points thanks to the rallying pound.

Topics