M&S and Tesco shares have been hit by heavy selling during another bleak session for UK-focused assets.
Sterling weakened to its lowest level in over a year and the FTSE 250 index lost more ground after yesterday’s 2% slide.
The retail sector took a hammering despite strong looking Christmas updates by Marks & Spencer and Tesco.
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M&S hails strong Christmas
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Tesco market share at 8-year high
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Greggs sales growth slows
08:42 , Graeme Evans
B&M European Value Retail shares have fallen 9% or 29.9p to 318.7p after the discounter published its “Golden Quarter” trading update.
Like-for-like sales in the UK fell 2.8% in the three month period but with a return to growth in December. It said this positive trend continued in January following the launch of new ranges.
Year-to-date sales growth for the business, which also trades in France and as Heron Foods, came in 3.3% higher.
It narrowed guidance for underlying earnings to a range of £620 million-£650 million and declared a special dividend of 15p a share.
08:23 , Graeme Evans
Marks & Spencer shares have lost ground in the wake of the retailer’s Christmas trading update, falling 6% or 21.1p to 355.7p.
The selling follows a strong run for shares, which were 230p in early March.
M&S reported clothing like-for-like sales growth of 1.9% and 8.9% in food, which compared with Deutsche Bank’s respective estimates of 3.5% and 8%.
Tesco shares have also performed well over the past year but fell 10.3p to 359.7p on the back of today’s Christmas update.
Richard Hunter, head of markets at Interactive Investor, said: “Storm clouds may be gathering over the UK economy, but in the meantime these two household British names have been busy making hay while the sun shines.
“Unfortunately, investors have chosen to slam both stocks in early trade amid the raft of economic challenges to come, while taking some profits after their strong recent rally.”
08:09
The pound has weakened to its lowest level in over a year, standing this morning at $1.2257 following a fresh decline of 0.8%.
The FTSE 100 index opened 3.14 points higher at 8254.17, underpinned by the support of dollar earning stocks due to the weaker pound.
In contrast, the FTSE 250 index has followed Wednesday’s 2% decline by losing another 0.5% or 105.97 points to 19,846.27.
Tesco shares fell 3% or 12.8p to 357.2p, Marks & Spencer slid 8% or 28.5p to 348.3p and Greggs lost 5% or 138p to 2488p following their updates.
Story continues
07:44 , Graeme Evans
Greggs said like-for-like sales growth in company-managed shops slowed to 2.5% in the final quarter of the year.
This compared with growth of 5.5% across the year as a whole.
The bakery chain said: “Trading performance reflected a well-publicised more challenging market backdrop in the second half of 2024.
“Lower consumer confidence impacted High Street footfall and industry-wide visits and expenditure.
“Against this challenging backdrop, Greggs maintained its market share of visits, including remaining customers’ number one destination for breakfast, and controlled operational costs well.”
Cost management in the final quarter means the company expects an outcome for the 2024 financial year in line with its previous guidance.
It added: “Looking into 2025, employment costs will result in further overall cost inflation, although wage increases should provide support to consumers.”
The group highlighted further expansion, with plans for between 140 and 150 net new shops in 2025 that includes 50 targeted relocations.
Greggs warns of post-Budget price hikes
07:28 , Graeme Evans
Tesco said it delivered its biggest ever Christmas after UK like-for-like sales growth accelerated to 4.1% in the six weeks to 4 January.
The festive performance followed 3.8% growth in the quarter to 23 November, leaving Tesco’s market share at the highest since 2016 at 28.5%.
Across the group, retail like-for-like sales were 3.8% higher in the Christmas period and 2.8% stronger in the third quarter.
The grocer continues to expect an operating profit for the 2024/25 year of around £2.9 billion, in line with the upgraded guidance at half-year results.
Read more here
07:16 , Graeme Evans
Marks & Spencer today reported “another good Christmas” after like-for-like sales rose 6.4% in the 13 weeks to 28 December.
Comparable sales in the Food department lifted by 8.9% on a year earlier and by 1.9% in Clothing, Home and Beauty.
Chief executive Stuart Machin said: “This was another good Christmas for M&S, building on a strong performance in the prior year.”
Sales records included the biggest single day in Food and the best ever online week for Clothing, Home & Beauty.
Machin said: “The external environment remains challenging, with cost and economic headwinds to navigate, but there is much within our control.”
He added: “Transforming M&S is a marathon, not a sprint, and we go into 2025 shifting up a gear and raring to go as we accelerate the scale and pace of change.”
Read more here
07:05 , Graeme Evans
The pound came under further pressure today, falling to $1.2311 after dropping yesterday to its lowest level versus the US dollar since April last year.
Trade war fears and expectations of fewer Bank of England interest rate cuts have also left the 10-year UK gilt at 4.8%, the highest level since 2008.
US Treasury yields also moved higher on Wednesday, with the 10-year yield rising to 4.7% by last night and the highest level since April last year.
The Dow Jones Industrial Average last night finished 0.3% higher and the S&P 500 rose by 0.2%.
The US stock market will be closed for the funeral of former President Jimmy Carter, whilst bond markets are also closing early.
The FTSE 100 index is set for a flat start to today’s session, having closed broadly unchanged last night. The domestic-focused FTSE 250 lost 2%.