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UK retail sales volumes fell back in March as soaring inflation, food availability and wet weather hit shopping activity.

According to the Office for National Statistics, retail sales volumes are estimated to have fallen by 0.9% in March 2023, following a rise of 1.1% in February 2023.

The ONS points out that sales volumes rose by 0.6% in the three months to March 2023 when compared with the previous three months, which is the first three-month on three-month rise since August 2021.

However, retail sales volumes in March 2023 were 3.1% lower than the same month last year and 0.7% below their pre-coronavirus February 2020 level.

Non-food stores sales volumes fell by 1.3% in March 2023, following a rise of 2.4% in February, the ONS suggesting that poor weather conditions throughout most of March affected sales.

Food store sales volumes fell by 0.7% in March 2023, following a rise of 0.6% in February 2023.

The ONS said food retailers reported a decline in volumes sold because of the increased cost of living and food prices.

It also noted that 26% of adults experienced shortages of essential food items that were needed on a regular basis. This is an increase from 18% in the period 8 to 19 February 2023.

More than a third of adults (36%) also reported that they could not find a replacement when the items they needed were not available, increasing from 25% in the previous month.

Automotive fuel sales volumes rose by 0.2% in March 2023, following a fall of 1.2% in February 2023, but sales remain 8.5% below their pre-coronavirus February 2020 levels.

Morning update

Activist investor Kelso has increased its stake in THG, citing the “significant intrinsic value” of its nutrition business.

The investor announced today that it has added to its stake in the group, taking its shareholding to around eight million shares, representing around 0.55% of the company.

It first took a 0.4% stake in THG in January by acquiring five million shares.

Today it cited news articles referencing Nestlé shareholders warning the group about its reliance on unhealthy foods.

It stated: “The Financial Times article refers to potential ‘systemic risk’ to companies that are over-reliant on sales of these unhealthy foods. This article encapsulates exactly what Kelso referred to as the ‘chocolate and sugar problem’ and the need for these companies to diversify their revenues into healthier products for long-term success.

“In our view, this strategic shift is akin to the major oil companies diversifying into renewable energy and highlights the huge relevance and underlying value of THG Nutrition.”

“Matthew Moulding, the CEO and founder of THG, has consistently tried to explain the true value of the nutritional business. In addition, the food and beverage companies we refer to above have vast offline global distribution networks that could significantly increase the offline sales of MyProtein. In return, we strongly believe, that MyProtein’s direct to consumer digital model would be highly attractive to many of these companies.”

Referring to the news that Apollo Global Management is exploring an offer for the entirety of the group, it stated: “Any forthcoming offers for THG as a whole must clearly reflect this underlying value and in the event that an acceptable offer is not forthcoming then a separation of MyProtein should be considered, alongside a potential partnership and minority investment from companies such as those highlighted.

“Kelso believes that THG’s nutritional business is likely ultimately to end up being owned by one of the large global food and beverage companies, all of which have already begun investing in nutritional, wellness and healthier assets to improve the mix of their sales between nutrition and chocolate or sugar products. All those transactions again support Kelso’s sum of the parts view of THG.”

Elsewhere, UK consumer confidence rebounded in April, according to GFK, amid a “sudden flow of optimism”.

The monthly consumer confidence index rose six points to –30 in April and is now at its highest level since February 2022, before the Ukraine war.

Expectations for personal finances over the year ahead rose eight points to –13, while expectations for the general UK economic situation rose six points to –34.

Joe Staton, client strategy director at GfK, said: “As food and energy prices continue to rise, and inflation eats into wages, the cost of living crisis is a painful day-to-day reality for many. But are all consumers buckling under the pressure? On the evidence of April’s confidence figures, the answer is no. Instead, there’s a sudden flowering of optimism with big improvements across the board.”

“The brighter views on what the general economy has in store for us, with April’s six-point rise cementing a 20-point improvement since January, could even be seen as the proverbial ‘green shoots of recovery’.”

Yesterday in the City

The FTSE 100 ended Thursday edging up 0.1% to 7,902.6pts.

Risers included Haleon, up 2.9% to 353.6p after releasing a trading update ahead of its AGM.

Also up were Hotel Chocolat, up 2.9% to 180p, Deliveroo, up 2.7% to 106.5p, Naked Wines, up 2.4% to 102.2p, Reckitt Benckiser, up 1.1% to 6,434p and Finsbury Food Group, up 1% to 100p.

Fallers included Bakkavor, down 2.9% to 95.2p, DS Smith, down 2.6% to 317.7p, Just Eat, down 2.2% to 1,406p, McBride, down 1.6% to 30p and Marks & Spencer, down 1.4% to 162.6p.

WH Smith was down 1.7% to 1,596p despite posting a strong rebound in sales and profits driven the by the reopening of global travel.