Source: Getty Images

Top story

UK retail sales continued to rise in May after bouncing back to growth in April as warm weather boosted the industry.

Official figures from the Office of National Statistics found that retail sales volumes are were up 0.3% in May 2023 following a rise of 0.5% in April 2023.

Non-store retailing sales volumes rose by 2.7% in May 2023 because of strong sales by online retailers selling outdoor-related goods and summer clothing, boosted by the warm weather in the second half of the month.

Automotive fuel stores sales volumes rose by 1.7% in May 2023, following a fall of 1.7% in April 2023; sales volumes were 9.5% below their pre-coronavirus (COVID-19) February 2020 levels.

However, food stores sales volumes fell by 0.5% in May 2023, with some anecdotal evidence of increased spending on takeaways and fast food because of the extra bank holiday

Grocery retailers also indicated that increased cost of living and food prices continued to affect sales volumes.

Non-food stores sales volumes fell by 0.2% in May 2023, following a rise of 0.9% in April.

Online spending values rose by 2.5% in May 2023 because of monthly increases across all store types except other non-food stores.

Commenting on the figures Kelly Miely, retail partner at Deloitte, said: “A trio of Bank Holidays, combined with the arrival of warm weather, encouraged consumers to spend on summer clothing and outdoor goods. This led to an unexpected lift in retail sales volumes in May.

“Despite the sunshine and official data showing some strong annual pay increases, the situation remains difficult for both retailers and consumers. Consumers in particular are alive to persistent inflation driving stubbornly high food prices.

“A price sensitive consumer is likely to stay with retailers that remain competitive by offering good value product ranges and cutting price of core items.”

Morning update

Hotel Chocolat Group has warned it is on course to post an annual loss after its turnaround plans are taking longer than expected to drive profitability.

The group said 2023 is a “transition year” to re-shape the business in readiness for its next stage of growth.

“While excellent progress has been achieved on cost base efficiencies, they are materialising later in the year than initially anticipated,” it said.

As a result, although sales are in line with market expectations, the group now expects to deliver an underlying marginal loss before tax for its 2023 financial year. It stressed that cash generation remains healthy with cash at hand of £19m and zero debt.

For its 2024 financial year, the group expects sales and underlying profit before tax to be lower than current market expectations due to ongoing weakness in consumer sentiment and continuing inflationary pressures.

For 2025 it clarified its guidance for the target of 20% pre-IFRS EBITDA to be achieved towards the end of the year, with the full benefits being achieved through 2026.

Elsewhere, consumer confidence continues to edge upwards, according to GfK’s long-running consumer confidence index,

The Overall Index Score increased three points to -24 in June.

The index measuring changes in personal finances during the last 12 months is up five points at -15, which is eight points better than June 2022.

Meanwhile, the forecast for personal finances over the next 12 months increased seven points to -1, which is now 27 points higher than this time last year.

The measure for the general economic situation of the country during the last 12 months is unchanged at -54, albeit still 11 points higher than in June 2022.

Expectations for the general economic situation over the next 12 months have increased by five points to -25; which is a significant 32 points better than June 2022.

Joe Staton, client strategy director, GfK, commented: “Despite the fierce economic headwinds of the cost-of-living crisis, double-digit grocery price increases, and the mortgage squeeze severely impacting both homeowners and renters alike, the UK Consumer Confidence Index has improved by another three points in June, the fifth monthly improvement in a row.

“The most telling finding is how we see our personal financial situation in the coming year – the money going in and out of our bank accounts – which shows a healthy seven-point increase. This is a whisker away from pushing into positive territory, something we have not seen since December 2021, and it’s also the third consecutive monthly increase – all of which is good news for the future.

“Consumers are showing remarkable resilience in the face of inflation that is currently refusing to yield. This is the best showing for the overall index score for the past 17 months and, if consumers continue to weather the current economic storm, then this will provide a firm foundation for getting back to growth.”

On the markets this morning, the FTSE 100 has dropped another 0.5% to 7,464.4pts so far this morning.

Risers include Nichols, up 2.7% to 1,073.2p, Kerry Group, up 1.7% to 87.2p and Haleon, up 1.4% to 329.6p.

Fallers include Hotel Chocolat, down 13.7% to 120p after this morning’s update, Ocado, dropping 8.8% back to 517.8p after yesterday’s share price surge and Virgin Wines, down 4.3% to 30.2p.

Yesterday in the City

Ocado was the City’s major news yesterday, soaring 32.1% to 567.8p on rumours that Amazon may be preparing a bid after Ocado’s recent share price slide.

Other risers included Deliveroo, up 2.5% to 106.5p, Just Eat, up 2.2% to 1,090p, B&M European Value Retail, up 1.3% to 575.6p, Hilton Food Group, up 1.2% to 655p and Naked Wines, up 1% to 106p.

However, the wider FTSE 100 continued to fall, dropping another 0.8% back to 7,502pts for its fourth consecutive day of losses.

The day’s fallers included THG, down 4.2% to 74.6p, Tesco, down 3.8% to 248.9p, DS Smith, down 3.4% to 280.4p, Bakkavor, down 3.1% to 95p, Tate & Lyle, down 3% to 736p and Premier Foods, down 2.2% to 131p.