BUSINESS LIVE: Retail sales fall; Deliveroo ups guidance; DFS demand slowdown

Just before close, the FTSE 100 was 0.08% up at 7,464.84.

Meanwhile, the FTSE 250 was 0.37% lower at 18,877.46.

Kazakhstan’s flag carrier Air Astana has unveiled plans for a London listing in a rare victory for the UK capital’s markets.

Air Astana hopes to raise $120million (£95million) by going public on the London Stock Exchange and Kazakhstan’s AIX market in efforts to help fund its future expansion.

(PA) – Proposals to make it easier for hospitality venues to extend their opening hours for major national or local events have moved closer to becoming law.

Parliament is currently required to approve orders by the Government to relax licensing hours on specified dates and times, with such changes taking place for royal and sporting occasions.

But Labour’s Emma Lewell-Buck (South Shields) said the “overly bureaucratic” process meant the change could not be made at short notice when England reached the final of the 2023 Women’s World Cup in Australia.

The South Shields MP noted the final was on a Sunday and the match kicked-off at 11am, with pubs losing out on extra revenue as they could not apply in time for an extension to their opening hours.

Parliament was also not sitting and therefore unable to approve a change, MPs heard.

Ms Lewell-Buck’s Licensing Hours Extensions Bill would simplify the parliamentary process and make it possible for an order to be approved when Parliament is in recess.

She said: “This is a really simple, impactful Bill. The pub is a great British institution. It’s right that they are able to welcome us through their doors for events of national and local significance.”

Tata Steel has today confirmed plans to close blast furnaces at its plant in Port Talbot, South Wales with up to 2,800 workers now set to lose their jobs.

Tata said its plans are subject to consultation but could be expected to result in up to 2,800 potential job losses across the business out of which, around 2,500 roles could be impacted during the next 18 months.

The boss of British Gas owner Centrica today admitted it was ‘impossible to justify’ his salary of £4.5million – and revealed his mother receives the basic state pension.

Chris O’Shea, 50, who lives in a village near Reading, earned £790,000 in pay in 2022 plus an annual bonus of £1.4million and a £2.3million long-term share bonus.

IQGeo Group plc had something to celebrate this week: Its first cash flow-positive year, as announced in a Monday trading update.

The software supplier to the telecoms and networking sectors put in a good showing all around, with successful acquisitions and a loyal client base contributing to a 66 per cent increase in total revenues to £44million, with gross profit margins hitting 60 per cent.

Deliveroo has forecast annual profits to surpass the top end of guidance, following modest fourth-quarter growth and despite a decline in order volumes.

The food delivery group anticipates adjusted earnings before nasties to be ‘slightly above’ the £60million to £80million guidance range for 2023.

British Gas has been named as the worst energy firm for customer satisfaction by consumer group Which?.

It found there was little to separate the remaining firms with the lowest customer scores – Boost, Scottish Power, Ovo Energy, Shell Energy, EDF Energy and E.ON Next.

Wincanton shares soared by almost half on Friday as French shipping group CEVA revealed a £566.9million takeover offer for the British logistics firm.

The 450p per share offer implies a Wincanton enterprise value of around £765million and is at a 52 per cent premium to the group’s closing share price on Thursday of 297p.

(PA) – The boss of British Gas’s parent company has said there is “no point” trying to justify his £4.5million pay package, as he recognised that many of his customers were struggling to pay their bills.

Chris O’Shea, who runs Centrica, told BBC Breakfast that “you can’t justify a salary of that size”.

“It’s a huge amount of money, I am incredibly fortunate. I don’t set my own pay, that’s set by our remuneration committee.

“That’s the first bonus I’ve taken in my time at Centrica, for a number of years, I’ve given up bonuses because of hardships that customers were facing,” he said.

The company has set aside £100million for a hardship fund, which has helped about 21,000 customers since 2021 by writing off up to £2,000 in debt.

“I thought it was right that we put a lot of our money, a lot of our profits, into supporting customers. But you can’t justify a salary of that size,” Mr O’Shea said on Friday

“You can’t, because it’s a huge amount of money to anybody looking at this.”

UK retail sales shrank by their largest amount in nearly three years last month, reigniting fears Britain could fall into recession this year.

New electric vehicles will become more affordable this year with a price war set to unfold, experts predict.

The arrival of less expensive Chinese brands and the introduction of the Zero Emission Vehicle (ZEV) Mandate is going to force the hands of other makers to slash their prices in order to remain competitive and meet new binding targets for EV sales set out by the Government.

The plan by Sainsbury’s to throw in the towel on banking is symbolic of the struggle that retailers have had in applying their skills to finance.

Big shopping concerns decided in the 1990s that what banking needed was consumer know-how. It looked as if the oligopoly of high street banking would be challenged.

Facebook veteran Sheryl Sandberg has sparked speculation she may move into politics after quitting the board of parent company Meta.

One of the most prominent women in Silicon Valley, the Democrat, 54, has long been rumoured to be interested in a tilt at the White House.

Russell Pointon, director of onsumer at Edison Group comments:

‘While GTV growth is promising, the impact of moderating food inflation on the quarter’s profit remains a point of interest. Additionally, the full impact of Deliveroo’s newly launched non-food retail offering, which was launched this quarter to help drive growth and diversify the company’s services, will become an increasing focus.

‘Attention now turns to Deliveroo’s finalised full-year results, scheduled for release in March, where the market will seek guidance for 2024 and insights into anticipated trends.’

The boss of Currys has lambasted the Government for imposing extra costs and red tape on businesses that will push up prices.

As the country’s biggest seller of electrical goods posted a slide in Christmas sales, chief executive Alex Baldock warned: ‘The biggest inflationary pressures are coming from Government.’

Michael Field, European market strategist at Morningstar:

‘UK retail sales ultimately proved a disappointment in 2023. While November’s rise in sales gave us hope, that was soon dashed in December, with the largest monthly decline since the pandemic.

‘This is something that will undoubtedly shock the markets.

‘This has completely changed the picture for 2023, with retail sales now having fallen by 2.4% over the period. This is not a great result, and despite GDP being positive over the same period, it is a clear sign that the UK economy is struggling.

‘Non food sales fell more heavily, down almost 4% in December, a clear sign that consumers are cutting back on non-essential items.

‘UK mortgage rates are coming down, but off a very high base. BBA rates are still close to 8%, putting further pressure on household incomes. The effect of higher interest rates is still feeding its way through the economy. Unfortunately, this means that retailers could be in for more pain in 2024.’

DFS Furniture suffered a 9.1 per cent year-on-year contraction in volume terms in the second half of 2023, with the retail blaming ‘record hot weather in September and early October when footfall and demand proved to be especially weak’.

However, the group told shareholder it has since seen demand recover and it expects to meet full-year earnings guidance.

‘The Group has performed well in tough trading conditions.

‘Despite the weaker than expected market, good operational performance and progress on gross margins and lowering our cost base have enabled us to deliver a profit for the first half that is slightly ahead of the prior year and we remain on track to deliver our full year profit target.

‘Looking forward, the Group has good growth prospects and is well positioned to drive attractive returns for shareholders, capitalising on market recovery as well as growing our Home offering and delivering our 8 per cent PBT target.’

The ousted boss of Endeavour Mining has been stripped of more than £20million of pay just weeks after he was fired for gross misconduct.

Sebastien de Montessus, who had led the gold miner since 2016, was sacked earlier this month after an investigation into two separate incidents including an irregular payment of £5million relating to the sale of a company asset as well as allegations about his personal conduct.

Deliveroo expects 2023 earnings to be ‘slightly’ ahead of the £60million to £80million forecast in previous guidance, with the total value of orders on its platform having risen by 3 per cent.

Founder and chief executive Will Shu said the company delivered a good performance in the UK and Ireland in the fourth quarter, and its international business returned to growth.

‘As we saw ongoing signs of stabilisation in consumer behaviour in the quarter, we continued to invest in the consumer value proposition to lay the foundations for future growth,’ he said.

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club:

‘Retail sales volumes ended the year on a sour note, registering the largest monthly decline since January 2021.

‘Partly, this is because UK consumers did their Christmas shopping early this year. Nevertheless, December’s decrease was much worse than expected and suggests pressure on the UK consumer may be intensifying.

‘Results from retailers themselves over Christmas paint a very mixed picture. The supermarkets fared reasonably well, as did Next and M&S.

‘But sales from the likes of JD Sports and Superdry have been very disappointing. This suggests UK consumers are becoming more choosy about where to spend their money.

‘Whether December’s weak retail sales are a blip or the start of a more worrying trend remains to be seen. But one thing’s for sure – despite optimism around interest rate cuts, the UK economy certainly isn’t out of the woods.’

From deepfake videos and mass job losses, the shadow of artificial intelligence has hung over Davos.

The Swiss mountain resort hosting global elites at the World Economic Forum has this week been dominated by the opportunities and dangers posed by AI.

Many hope it will bring a golden age of life-saving scientific developments – and higher profits.

Jacqui Baker, head of retail at RSM UK:

‘After a slight uptick in November, we’ve seen the biggest fall this year in December, marking a shocking end to the Golden Quarter. Black Friday tempted some consumers to bring forward their spending to November, but ongoing cost-of-living pressures meant most households cut back across all retail categories.

‘This meant retailers were forced to prolong their heavy discounting into December to shift stock which will have been a big hit to margins.

‘Last year was a challenge for retailers and sadly this looks set to continue into 2024. Despite consumer confidence increasing and real wages rising, inflation had a slight setback in December showing just how fragile the economy is.

‘As a whole, things are slowly improving but consumers probably won’t start to feel like they have more money in their pocket until the summer. After a challenging year, another six months of tough trading could be too long for some retailers.

‘To compound the problem and hit retailers when they’re down, disruption from events in the Red Sea, and the possibility of cost increases and supply delays could be another headwind they have to navigate this year.

‘This could be particularly damaging for fast fashion that relies on speed to deliver the latest trends at the right price.’

Retail sales volumes slumped by 3.2 per cent in December from November, marking the biggest decline in nearly three years, fresh data from the Office for National Statistics shows.

Economists had forecast a 0.5 per cent dip and the disappointing figures could risk a contraction in the British economy for the fourth quarter.

The ONS said retail sales are likely to subtract 0.04 percentage points from British economic output in the fourth quarter.

‘Food stores performed very poorly, with their steepest fall since May 2021 as early Christmas shopping led to slow December sales,’ Heather Bovill, deputy director for surveys and economic indicators at the ONS said.