Shopping centres suffered the steepest decline with footfall falling 3.1%

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Retail footfall continued to decline in July, marking the worst performance for the month since 2012.

Total footfall dropped 1.9% year on year in the four weeks to 27 July, according to figures released by the BRC-Springboard Footfall and Vacancies Monitor.

This time last year it had fallen 0.9%.

Shopping centres were the most affected locations, with footfall down 3.1%, following a 3.4% decline in July 2018.

The UK’s struggling high streets followed, with the number of shoppers down 2.7% in July. Last year footfall had increased by 0.3%.

Meanwhile, retail parks experienced a positive performance, with footfall increasing 1.2%. This was a reverse of last year’s negative trend, when it had fallen 0.5%.

“July was a much more challenging month for high streets and shopping centres than for out-of-town destinations,” said Springboard marketing & insights director Diane Wehrle.

“Consumer demand is ever more polarised between convenience and experience, and the stronger performance of out-of-town destinations where footfall rose by 1.2% in July reflects the fact that retail parks are successfully bridging the convenience-experience gap.”

In terms of jobs, the national town centre vacancy rate in July increased to 10.3%, reaching its highest level since January 2015 due to “sluggish sales growth and declining footfall”, BRC CEO Helen Dickinson said.

She continued: “Retailers have faced a challenging environment this month, with declines in footfall on high streets and shopping centres.

“High streets and town centres play an important part in our local communities, and we should be concerned by the rise in empty store fronts.”

To prevent more shops shutting their doors, the government should act fast by freezing business rates to “relieve some of the pressure bearing down on the high street”, Dickinson added. 

Morning update

New Zealand dairy giant Fonterra has announced it will post a record loss this year amid significant writedowns of its international businesses.

The company will take one-off accounting hits worth NZ$820m-NZ860m (£440m-£460m) on the value of a number of its business, which will lead to a reported loss of NZ$590m-NZ$675m for the year.

CEO Miles Hurrell said: “Since September 2018 we’ve been re-evaluating all investments, major assets and partnerships to ensure they still meet the Co-operative’s needs. We are leaving no stone unturned in the work to turn our performance around. We have taken a hard look at our end-to-end business, including selling and reviewing the future of a number of assets that are no longer core to our strategy. The review process has also identified a small number of assets that we believe are overvalued, based on the outlook for their expected future returns.

“We made a commitment to provide information to update farmers and unit holders as it comes available. The numbers still need to be finalised and audited but we now have enough certainty overall to come out in advance of our annual results announcement in September.”

It will write down its DPA Brazil business by around NZ$200m due to economic conditions in Brazil, which are not at the level required support sales volumes and prices its forecasts were based on.

It has also taken a NZ$135m hit from the sales of its Venezuelan consumer business, while China Farms will be impaired by NZ$200m due to slower than expected operating performance.

Finally, its New Zealand consumer business is suffering a slower than expected recovery in market share and has been written down by $200m, while its Australian Ingredients business is adapting to the “new norm of continued drought, reduced domestic milk supply an aggressive competition” and has been written down by NZ$70m.

“DPA Brazil, the New Zealand consumer business, China Farms and Australian Ingredients’ performance have been improving, but slower than expected and not at the level we had based our previous carrying values on.”

“These are tough but necessary decisions we need to make to reflect today’s realities.

As a results of the significant write-downs that reflect important accounting adjustments Fonterra needed to make, the group has decided to scrap its annual dividend this year.

Chairman John Monaghan said “Our Co-op remains strong at its core. Over the last 12 months we have improved our cashflow, reduced our debt and removed significant cost from within the business, but there is still more to do. The business units that are at the heart of our new strategy are delivering for us and we look forward to discussing our new strategy and our performance with our owners in September.

“It’s important that we now implement our new strategy and deliver value back to them.”

On the markets this morning, the FTSE 100 has opened the week up 0.5% to 7,292.6pts so far this morning.

Early risers include Glanbia (GLB), up 5.8% to €11.86, McColl’s (MCLS) up 4.8% to 65p, C&C Group (CCR), up 2.9% to €4.07, PayPoint (PAY), up 2.5% to 937p and Marks & Spencer (MKS), up 2.4% to 192p.

The few fallers so far today include Hilton Food Group (HFG), down 3.4% to 901p, Devro (DVO), down 1.5% to 195.5p and AG Barr (BAG), down 0.5% to 643p.

This week in the City

It’s a quiet week ahead on the UK markets as the City has effectively now headed off on holiday for summer.

There is one crucial update this week from the US, which is Walmart’s (WMT) third quarter figures on Thursday that will included the a quarterly trading update for Asda.

Internationally there are also interim results from meal kit provider Hellofresh and German consumer goods group Henkel, both tomorrow.

In economic news, the UK’s official monthly retail sales figures from the Office of National Statistics are out on Thursday, while Tuesday brings the monthly official update on UK inflation.