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Retail sales slumped by 3.2% in December, which was the worse monthly drop since the depths of the coronavirus pandemic, as consumers cut back in the run-up to Christmas.

The Office of National Statistics found that retail sales volumes fell by 3.2% in December following a rise of 1.4% in November.

The ONS said December’s decrease was the largest monthly fall since January 2021, when Covid restrictions affected sales.

Total non-food store sales volumes (the total of department, clothing, household and other non-food stores) fell by 3.9% in December 2023, from an increase of 2.7% in November 2023.

Retailers reported that part of the fall over the month to December was because of consumers purchasing gifts earlier than usual, in November

This backed up the ONS’ public opinion and social trends bulletin for the period 29 November to 10 December which reported that 46% of adults had, or were planning to spend less, on Christmas food or presents with 39% buying Christmas food or presents earlier, to spread the cost.

Non-food retailers also reported a quiet trading in the post-Christmas period, reduced footfall amid cost-of-living pressures and customers spending less per visit on average due to difficult economic climate with customers spending less on average.

Even food growth fell away during the month, according the ONS.

Sales volumes fell 3.1% on the month, and 0.1% when comparing the three months to December 2023 with the previous three months.

Growth of 1.1% in November was attributed to early Christmas shopping by consumers, with this then partly contributing to the December fall.

The overall quarterly retail data showed sales volumes fell by 0.9% in the three months to December 2023 when compared with the previous three months.

On an annual basis, sales volumes fell by 2.8% in 2023 and were their lowest level since 2018.

Morning update

Food delivery giant Deliveroo has posted profits ahead of expectations as revenues continued to grow in its fourth quarter.

For the three months to the end of December Delvieroo’s GTV (gross transaction value) growth remained resilient, with improving trend in orders.

GTV was up 4% year-on-year in constant currency despite the moderation in inflation, while order growth improved slightly to flat year on year.

During the quarter, UK and Ireland GTV growth was 7% YoY, with underlying GTV trends remaining steady. Sequentially lower growth against the third quarter was impacted by factors including the active management of certain restaurant partners to build consumer trust through lower mark-ups and stronger operational performance

International GTV returned to growth of 1% YoY in constant currency, with improving trends in most markets and continued strength in Italy and UAE

Overall group revenue growth of 1% in constant currency lagged GTV growth in the quarter. This was due to a mix shift in marketing spend towards promotional marketing activity as well as some targeted investment in consumer fees, to capitalise on ongoing signs of stabilisation in consumer behaviour.

Full year GTV growth of 3% was in-line with guidance of lower single digits percentage growth in constant currency

However, adjusted EBITDA expected to be slightly above the £60-80m guidance range

Will Shu, Founder and CEO of Deliveroo, said: “I’m really proud of the team’s execution in Q4, including launching our retail offering. We delivered a good performance in UKI and saw International return to GTV growth, with encouraging trends in several markets.

“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. We closed out a successful 2023 with GTV in line with guidance and adjusted EBITDA slightly above the top end of our guidance range.”

On the markets this morning, the FTSE 100 is up another 0.6% to 7,503.6pts.

Early risers include Naked Wines, up 5.8% to 58.9p, Glanbia, up 3.9% to €15.96 and Kerry Group, up 2.5% to €77.40.

Fallers include McBride, down 2.8% to 77.6p, Science in Sport, down 1.7% to 14p and Marks & Spencer, down 0.4% to 252.9p.

Yesterday in the City

The FTSE 100 was up 0.2% yesterday after some significant falls earlier in the week to close at 7,459.1pts.

Naked Wines was up 7.1% to 55.7p after hitting sales expectations over Christmas, despite an expected overall drop in customer activity.

Bakkavor closed up 5.7% at 96.8p after it posted strong festive sales numbers.

Other risers included Just Eat, up 7% to 1,170p, Glanbia, up 5.2% to €15.36, Nichols, up 2.3% to 1,110p, AG Barr, up 1.5% to 545p, Greencore, up 1.5% to 97.5p and PayPoint, up 1.4% to 506p.

Fallers included B&M European Value Retail, down 3.4% to 524.8p, Kerry Group, down 2.8% to €75.50, DS Smith, down 1.8% to 278.4p, Hilton Food Group, down 1.6% to 782p and Ocado, down 1.5% to 571.4p.