The retail sector was firmly in the spotlight on the London market today after a raft of weather-hit updates from leading high street chains.
Halfords, JJB Sports, Kingfisher and Mothercare laid bare a tough summer for Britain’s retailers, while official figures revealed retail sales grew by a lower-than-expected 0.1% between May and June.
The wider FTSE 100 Index lost early session gains – up 11.5 points at 5697.3 - after more disappointing news on the US economy sent the Dow Jones Industrial Average into the red.
US home sales figures showed sales fell 5.4% in June to the lowest level since October.
There were also fresh worries over the eurozone debt crisis, as Spain was forced to pay more to borrow money and its implied borrowing costs pushed back into the 7% ’bailout territory’ on bond markets.
But it was retailers who were grabbing the headlines in the UK, with B&Q owner Kingfisher among the top flight fallers after a weather-driven 0.4% drop in like-for-like sales in the 10 weeks to July 7.
With margins hit by the need to discount summer stock, shares fell 3.8p to 271.4p, despite chief executive Ian Cheshire’s claim that Kingfisher remained on track to emerge as “a world class retailer”.
Car parts and cycle chain Halfords issued a profits warning and said its chief executive David Wild had stepped down with immediate effect after like-for-like sales slumped 7.5% in the first quarter of its financial year. Shareholders took the news in their stride and welcomed the prospect of a change at the top as the stock rallied 4% or 7.7p to 205.1p in the FTSE 250 Index.
Mothercare was also higher, climbing 9.3p to 214.6p, as it offset a 6.7% drop in UK like-for-like sales by reporting strong sales growth overseas.
However, shares in JJB Sports were back on the slide, falling 2p to 5.5p, after admitting that poor trading meant it would need to tap strategic partners for more funding.
Bucking the gloom on the high street was Newcastle United owner Mike Ashley’s Sports Direct International, which cheered investors with underlying earnings of £240.5m in the year to April 29, beating City expectations.
The bumper results mean that Mr Ashley has hit the first of several “super-stretch” targets that could see him pick up eight million shares, current worth £24m, in 2018.
Shares edged 4.7p lower to 290.1p today, but have nearly trebled in value over the past two years.
Lloyds Banking Group was among the risers after it announced a deal with the Co-operative Group to sell the 632 branches it was ordered to offload after taking a bail-out.
The deal is worth up to £750m, which is half the amount some had expected, but the deal will remove some of the uncertainty hanging over the bank and allow it focus on its turnaround.
Shares were up 0.2p at 29.9p.