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UK retail sales fell backwards year on year in June as damp weather hit consumer spending during the month, according to the latest BRC-KPMG Retail Sales Monitor.

It found UK total retail sales decreased by 0.2% in the five weeks to 29 June, against a growth of 4.9% in June 2023.

Despite the fall, this was actually an improvement on the three-month average decline of 1.1%.

Food sales increased 1.1% year on year over the three months to June, against a growth of 9.8% in June 2023.

Non-food sales decreased 2.9% year on year over the three months to June, against a growth of 0.3% in June 2023. This is steeper than the 12-month average decline of 1.9% and sales were in decline during June.

In-store non-food sales over the three months to June decreased 3.7% year on year, against a growth of 2.0% in June 2023, while online non-food sales decreased by 0.7% year on year in June from a 1% decline in June 2023.

British Retail Consortium CEO Helen Dickinson commented: “Retail sales performed poorly in June as the cooler weather during the first half of the month dulled consumer spending. Sales of weather-sensitive categories such as clothing and footwear, as well as DIY and gardening, were hit particularly hard, especially compared to the surge in spending during last June’s heatwave.

“Electronics sales had a better month as football fans cheering on their national teams upgraded their home entertainment systems and people replaced their pandemic purchases. Retailers remain hopeful that as the summer social season gets into full swing and the weather improves, sales will follow suit.

“The retail industry is vital to the nation’s economy as an important source of employment and investment. The industry shapes local communities and provides three million jobs across the country. Through its scale and reach, retail can make a huge contribution to Labour’s policy goals, and the industry stands ready to work with the new government to find ways to make this happen.”

Linda Ellett, UK head of consumer, retail & leisure, KPMG, said: “Summer may finally have arrived, but it did little to persuade consumers to hit the shops, with retail sales flatlining at 0.2% in June.

“Items for the home topped the best-selling categories, with homewares, cooking accessories and furniture all seeing positive growth in June as consumers made the most of the sunshine to enjoy time at home. Computing sales also continued to do well, achieving double-digit growth both online and on the high street. Despite the warmer weather and the football providing opportunities for people to gather at home, food and drink sales were disappointing in June, recording just 1.16% growth, and clothing and footwear also saw a disappointing performance, with negative growth both on the high street and online.

“Despite pressure on household finances easing, with petrol and energy costs and shop price inflation all continuing to fall, consumers remain incredibly reluctant to take the brakes off of their spending. The stimulus of good weather, Wimbledon and Euro 24, which was hoped would drive consumer spending, has so far failed to materialise and financial concerns remain with many households.

“Retailers, who are running to stand still at the moment, having exhausted all of the levers they have at their disposal to cut costs and drive sales via promotions, will be looking to the new government to boost the economy and confidence. The overall economic conditions may slowly be improving, but the health of the sector remains fragile, and action is needed now to help support this vital economic contributor – particularly around neglected areas such as business rate reform “.

On the food and drink sector, Sarah Bradbury, CEO, IGD, said: “Despite unseasonable, cool weather throughout most of June, the grocery retail market has enjoyed both value and volume growth in the last month, compared to June 2023.

“Notably, value and volume performance improved in the final week of June, coinciding with the brief but intense heatwave felt across the UK. It is also worth keeping in mind that although value and volume growth is lower compared to last month’s performance, the market is annualising against significant growth that occurred in June 2023.

“On a different note, while the election campaign has not impacted shopper confidence during June, we might expect to see a boost following the election. We have seen a positive bump for shopper confidence immediately following the three previous general elections, therefore we should expect something similar as we move through July.”

Morning update

Naked Wines has negotiated a new $60m credit facility with PNC Bank, to replace the facility previously in place with Silicon Valley Bank.

The headline facility size is $60m, secured against global wine assets, with a term of five years.

A single financial performance covenant requires fixed charge cover to be greater than 1.2x, but only tested if outstanding available liquidity is less than $12m.

Naked Wines said the new facility gives it additional liquidity availability due to a higher advance rate, improved eligibility of inventory and no minimum cash holding requirement.

It will also reduced interest costs due to improved margins and elimination of cash holding requirement and provide greater operational flexibility, most notably through the reduction from three to one financial covenants.

The company anticipates having over $40m of available liquidity on the facility basis at the point of completion.

Rodrigo Maza, CEO, commented: “I’m pleased to have agreed this new facility with PNC Bank and welcome them on board as our new financial provider. The new facility proves the strength of Naked’s balance sheet and business outlook while reinforcing our liquidity and ability to invest in bringing the best wines to our customers. We look forward to working closely with PNC and continuing to support independent winemakers around the world.”

Meanwhile, CFO James Crawford has informed the board of his intention to step down in the autumn of 2024 following the negotiation of this facility.

Naked said this timing is consistent with the two-to-three-year incentive arrangement agreed with James when he rejoined the board as CFO in 2022.

He will undertake a transition process including overseeing the conclusion of the audit and presentation of the 2024 results before leaving the business during the autumn, by which time it expects to have a successor in place.

Rowan Gormley, non-executive chairman, said: “James has been with the company for over 10 years, as both CFO and a period as managing director of Naked Wines UK. During his tenure Naked has grown from annual revenues of £40m to £290m in FY24, and James’ leadership and expertise have played a valuable role in navigating that growth and the subsequent challenges.

“On behalf of the board and the company, we extend our gratitude to James for his service and wish him the best in his future endeavours.”

Crawford commented: “I’m incredibly proud of what we have achieved in the decade I’ve been at Naked. We’ve grown the business by an order of magnitude, overcome some significant challenges, and created an organisation that I believe can thrive for a long time to come. I rejoined the board in July 2022 to work through the post-pandemic challenges and get the business back onto a firm footing. Over the last year we’ve reduced the cost base and inventory levels are now dropping.

“Today’s announcement of our refinancing, which brings additional liquidity and flexibility for the company, represents the end of this chapter and the right time for me to step back from the CFO role. I remain a committed and passionate supporter of Naked and will cherish the lifelong friendships made during my tenure. I wish the board, Maza and the exceptional management team at Naked all the best for the journey ahead.”

Elsewhere this morning, consumer card spending fell 0.6% year on year in June – the first decline since February 2021 – as colder weather early in the month hampered spending at clothing stores, pubs and garden centres.

Data from Barclays showed the cold in early June 2024, in contrast to 2023’s sunshine and warm weather, meant that retail spending fell by 2.6% – its most significant year-on-year drop since June 2022 (–3.8%). High street cutbacks meant in-store spending (excluding groceries) was down 5.1%, while clothing sales declined 7.7% year on year.

Supermarket spending recorded its first decline (–2.6%) in two years, which comes as the majority of consumers (65%) say they’re cutting back on their weekly grocery expenditure.

The slowdown can also be attributed to the drop in food price inflation, which has now fallen to its lowest level since October 2021 at 1.7%. Encouragingly, over a third (36%) of shoppers say they have noticed food prices have been rising at a slower rate in recent months.

Pubs, bars and clubs saw modest year-on-year growth in June (up 0.5%), with the influx of sports fans watching the Euros outweighing the bad weather, and keeping the category on par with its strong performance in June last year.

However it was a tougher month for restaurants, which declined 11.5% year on year, although this was an improvement on last month (down 15.7%), reflecting the selective approach cost-conscious consumers are taking to discretionary spending; over half (52%) of those cutting back on non-essential spending are choosing to spend less on eating out at restaurants.

Karen Johnson, head of retail at Barclays, said: “Once again, our data demonstrates the undeniable impact that unseasonable weather can have on consumer spending. The sluggish demand at the start of June even caused some fashion brands to adjust their sales schedules, although I was pleased to see that the situation has since improved with the arrival of sunnier days.

“However, the dreariness didn’t dampen spending across the board, with takeaways, digital content and entertainment all benefitting from people sheltering at home, and hopefully we’ll see sustained interest in The Euros – regardless of England’s fate – and sunnier weather driving people to their local in July.”

Yesterday in the City

The FTSE 100 fell back 0.1% to 8,193.5pts to kick off the week.

Britvic was up 4.5% to 1,264p after news of its acceptance of a £3.3bn bid from Carlsberg was announced.

Other risers included Ocado, up 5.4% to 345.9p, Science in Sport, up 4% to 19.5p, B&M European Value Retail, up 2.9% to 456.5p, C&C Group, up 2.6% to 163.4p, Kerry Group, up 2.1% to 76.6p and Bakkavor, up 2% to 151p.

The day’s fallers included McBride, down 3.6% to 136p, Deliveroo, down 2.4% to 128.4p, Nichols, down 0.9% to 1,065p and Sainsbury’s, down 0.8% to 259p.