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UK retail sales fell back over the crucial Christmas period as Omicron kept shoppers away from stores. 

The Office of National Statistics said this morning that retail sales volumes fell by 3.7% in December 2021, albeit they remained 2.6% higher than their pre-coronavirus February 2020 levels. 

Non-food stores sales volumes fell by 7.1% in December 2021, with falls across department stores, clothing stores, other non-food stores and household stores following strong sales in November. 

The ONS said that the Omicron variant, which increased rapidly during December, was “reported by some retailers as impacting retail footfall”. 

Food store sales volumes fell back by 1% in December, although volumes remain 2% above levels in February 2020. 

Automotive fuel sales volumes fell by 4.7% in December 2021 as increased home working in December 2021 reduced travel. Sales volumes in fuel remain 6.6% below their February 2020 levels. 

Retail sales values, unadjusted for price changes, fell by 3.1% in December 2021, following an increase of 2.1% in November. Over the three months to December 2021, the value of sales was up 6.2% on the same period a year earlier, reflecting an annual retail sales implied price deflator of 5.8%. 

The proportion of retail sales online rose slightly to 26.6% in December 2021 from 26.3% in November. 

Overall, the ONS said that between 2020 and 2021 the volume of retail sales rose by 5.1%, which is the strongest growth since 2004 and last bettered in 2002 (5.7%).  

However, the ONS said that growth between 2020 and 2021 should be interpreted with caution given restrictions on travel and non-essential retail which contributed to a fall in sales during 2020. 

Morning update 

Consumer Confidence has fallen a further four points in January, according to GFK’s Consumer Confidence Index, with all five measures down. 
GFK said that the “financial pulse of the nation grows weaker amid worries over inflation, fuel bills and interest rate rises”. 

Most notably, the measure for the general economic situation of the country during the last 12 months is eight points lower at –47, although this is 20 points higher than in January 2021.    

the expectations for the general economic situation over the coming 12 months  dropped by eight points to –32, which is 12 points higher than January 2021. 

Joe Staton, Client Strategy Director, GfK commented: “The UK’s financial pulse weakened further this January driven by concerns over personal finances and the general economic situation. All five measures are down in January and the picture on the economy is especially bad with an eight-point decrease in how we see the past year and the year to come.  

“Despite some good news about the easing of Covid restrictions, consumers are clearly bracing themselves for surging inflation, rising fuel bills and the prospect of interest rate rises. The four-point fall in the major purchase index certainly suggests people are ready to tighten their belts.  

“Will the mood brighten when the latest wave of the pandemic subsides and Covid numbers improve? It seems unlikely because it’s the cost-of-living squeeze that’s worrying us now and this will affect us for months to come.” 

Wagamama owner Restaurant Group saw a sharp downturn in trading in December due to rising Covid cases. 

It said the introduction of the UK Government’s “Plan B” in early December which included advice to work from home, calls for further caution in socialising and increased testing requirements for international travel reduced consumer confidence and put additional restrictions on the hospitality and travel sector.   

Like for like sales at Wagamama had been up 11% in October and 8% in November and fell to 1% growth in December compared to pre-Covid 2019 figures. 

Its pubs saw monthly growth of 9% and 7% switch to a 7% like for like sales fall. 

In both the Restaurant and Pubs markets like for like sales were 10% to 12% lower in December than in October and November. 

However, TRG continued to trade ahead of the market “demonstrating our ability to out-perform in all market conditions”. 

It said that whilst it is encouraged with the recent Government announcement that all “Plan B” restrictions will be lifted next week, it expects consumer confidence may take longer to recover and that a recovery in air passenger volumes remains dependant on the timing of changes to UK and International restrictions. 

However, the group announced that due to good cost control and continued strong trading relative to the market, management now expects the group’s full year adjusted EBITDA will be at the top end of its previously guided range and net debt will be less than £180m. 

“Despite the near-term uncertainties, the Board remains confident in the Group’s prospects given the strength of our brands, substantially reduced net debt and outperformance versus the market,” it said. 

On the markets this morning, the FTSE 100 has fallen 0.9% to 7,514.4pts after news that retail sales hit been lower than expected over Christmas.

Fallers include Naked Wines, down 3.5% to 560p, Hotel Chocolat, down 2.4% to 513.5p and THG, down 2.4% to 150.1p.

Risers include Premier Foods, up 1.5% to 120.4p, Finsbury Food Group, up 1.1% to 96p and Virgin Wines, up 0.9% to 210p.

Yesterday in the City 

The FTSE 100 edged back 0.1% to 7,585pts yesterday 

Premier Foods was a key risers, climbing 7.8% to 118.6p after upgrading its full year earnings expectations due to continued strong branded trading during the quarter including Christmas. 

Other risers included Kerry group, up 4.8% to €118.6p, Just Eat, up 3.4% to 4,052p, Devro, up 3.4% to 216p, DS Smith, up 2.2% to 216p and WH Smith, up 2.1% to 1,697.5p. 

Associated British Foods fell 4.2% to 2,042p despite a strong rebound in Primark sales as it warned that higher costs were eating into margins at its other divisions, most notably grocery. 

Other fallers included Hilton Food Group, down 2.5% to 1,080p, Naked Wines, down 2.4% to 580p, THG, down another 2.1% to 153.7p, Sainsbury’s, down 1.4% to 287.1p and Marks & Spencer, down 1.4% to 223.5p.