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A June heatwave helped improve grocery volumes and saw sales edge upwards, according to new data from NIQ.

Total till grocery sales in June slightly increased to 12.4% from 12.3% in May.

Volume growth at the grocery multiples over the last month continued to improve at -2% (compared to -2.6% in May).

The week ending 17th June, experienced consistently warm weather and which coincided with this year’s Father’s Day, saw weekly grocery sales improve to £2.9bn, which is the second highest week so far this year behind Easter.

NIQ said the warm weather had led to a boost in sales for more seasonal drink items, with strong sales uplifts for sports & energy drinks (+31%), flavoured non carbs (+23%), mineral water (+25%), cider (+22%).

UK grocery retailers also experienced a growing demand in other seasonal items such as suncare (+74%), Ice-cream (+47%) and hayfever remedies (+25%).

The warm weather also encouraged Brits to shop in-store, with NIQ revealing a rise in in-store sales (+13.4%) over the four week period, leading to a £1.1bn increase compared to the same period last year.

However, this led to slower sales growth (+4.1%) for online, with the online share of FMCG sales also dipping to 10.4%.

Discounters maintained strong growth with sales increase for Aldi (+22.2 %) and Lidl (+18.7).

Marks and Spencer continued to attract new shoppers, with sales up 15.4% to maintain its spot as the fastest growing retailer outside the discounters.

Of the mults, Sainsbury’s saw the highest 12-week growth at 12% followed by Asda at 11.7%. Tesco’s sales were up 11%, while Morrisons was up 2%.

Mike Watkins, NIQ’s UK head of retailer and business insight, commented “In the last four weeks there were 34 million extra visits to stores compared to last year and encouragingly 30% more than the additional visits we recorded in early May.

“These visits would have included smaller baskets, drinks, snacks and refreshments, as shoppers were out and about enjoying the sun. It’s no surprise that online grocery sales have taken a bit of a hit as there was less of a need to order in a big grocery shop.”

“We expect to see supermarket volumes continue to improve slowly, as food inflation peaks. However, what shoppers buy and where they shop will continue to be strongly influenced by the continued squeeze on disposable incomes.

“This means that spending over the next few months is still going to be focussed on essential needs but as we continue to enjoy the sunshine this summer, there’ll be an increase in impulse spending on cold drinks and treats which is an upside for supermarkets in general.”

Morning update

Shop price annual inflation decelerated to 8.4% in June, according to the latest BRC-NielsenIQ Shop Price Index.

This figure is down from 9.0% in May and now below the three-month average rate of 8.7%.

Food inflation decelerated to 14.6% in June, down from 15.4% in May.

This slowing inflation is below the three-month average rate of 15.2% and is the second consecutive deceleration in the food category.

Fresh food inflation slowed further in June, to 15.7%, down from 17.2% in May, while ambient food inflation decelerated slightly to 13.0% in June, down from 13.1% in May.

However, the ambient food inflation rate remains is the second fastest rate of increase in the ambient food category on record.

Meanwhile, non-food inflation decelerated to 5.4% in June, down from 5.8% in May.

BRC CEO Helen Dickinson commented: “Households up and down the country will welcome the easing of shop price inflation in June. Food inflation slowed for the second consecutive month, particularly for fresh products, as retailers cut the price of many staples including milk, cheese and eggs. Clothing and electrical goods also saw falling prices, helping customers to pick up a bargain ahead of the summer holidays.

“If the current situation continues, food inflation should drop to single digits later this year. However, it is imperative that government does not hamper this progress by introducing costly new policies. Reforms to the packaging levy (Extended Producer Responsibility) and a new deposit return scheme, could create an additional £4bn burden on retailers and their customers. Along with a rise in business rates, and the introduction of border controls in October, these policies could hinder the Government’s efforts to combat inflation.”

Mike Watkins, head of retailer and business insight, NielsenIQ, added: “Whilst prices are still higher than a year ago, the slowdown in food inflation is welcome news for shoppers, helped by supermarkets lowering prices of some staple goods. And if global supply chain costs continue to fall, we may now be past the peak of price increases.

“However, with most households needing to save money, purchasing behaviour for the rest of this year is still likely to shift towards essential needs with discretionary consumption being deprioritised or delayed.”

On the markets this morning, PZ Cussons has issued a trading statement for the year ended 31 May 2023.

It said that group Q4 like for like revenue growth reached 6.7% to push full year revenue growth to 6.1%.

Full year revenues are expected to be approximately £655 million with organic revenue growth in each geographic region in Q4.

Adjusted profit before tax for the year will be at least least £70m, reflecting a particularly strong Q4 performance in Africa

As anticipated, Europe & Americas operating margin also returned to high teens in the second half of its financial year.

PZ Cussons said key brands were performing well, with the majority of its ‘must win’ brands in revenue growth, Childs Farm up 12% in its first full year of ownership and further geographical expansion of Original Source.

It also commented on developments in its key Nigeria market, welcoming recent policy announcement by the Central Bank of Nigeria to liberalise the foreign exchange regime which is “highly likely to improve the longer-term prospects for Nigeria and remove some of the cash challenges faced by multi-national companies”.

However, this move has resulted in a devaluation of the Naira, which will reduce the company’s revenues and profits if the currency continues to devalue from rates used for its 2023 results statement.

“Management believes that the group will be well placed to withstand any macro-economic volatility in Nigeria given our market position and the significant improvement in the profitability of our business there in recent years,” it stated.

“The group is committed to improving the performance of our Nigerian business further given the significant market opportunity and the strength of our brands.”

CEO Jonathan Myers commented: “While the Naira devaluation will have a one-off impact to the group’s near-term reported financial performance, we believe the medium to long term prospects for our Nigerian business will be much improved by the economic reforms, currently being introduced by the new government, the likes of which have not been seen for decades.

“More widely, PZ Cussons has delivered another year of progress against a challenging economic backdrop. We have continued to transform the business and build brands for the long term, while responding to the day-to-day challenges of cost inflation and meeting the needs of the cost-conscious shopper. This has resulted in a third consecutive year of like for like revenue growth in FY23. We remain committed to delivering the benefits of executing our strategy in the year ahead.”

Ocado Group has announced that Rachel Osborne has been appointed as an independent non-executive director with effect from 1 September 2023.

Osborne was the CEO of Ted Baker, stepping down from the role in June 2023, and has previously served as the CFO of Debenhams, Domino’s Pizza Group and was finance director of John Lewis within the John Lewis Partnership.

Tim Steiner, CEO of Ocado, said: “I am very excited to welcome Rachel to our Board. Rachel’s significant experience in transformation and her commercial mindset will be a real asset as Ocado Group continues to expand globally and seeks to enter into new non-grocery markets.”

Commenting on her decision to join the Ocado Board, Osborne said: “I am delighted to be joining the Ocado Group board at an exciting time for the group with new innovations driving efficiency and growth to deliver existing and new opportunities globally. I am looking forward to working with the rest of the board to continue Ocado’s journey.”

Meanwhile Ocado has said that Michael Sherman will retire from the board with immediate effect providing him more time to focus on his expanded executive role at Barclays UK.

The FTSE 100 has opened up 0.2% to 7,465.7pts this morning.

Early risers include AG Barr, up 2.5% to 469p, Greggs, up 1.9% to 2,564p and B&M European Value Retail, up 1.6% to 586.2p.

Fallers include PZ Cussons, down 4% to 168p, McBride, down 2.1% to 26.3p and THG, down 1.3% to 77p.

Yesterday in the City

The FTSE 100 opened the week edging down 0.1% to 7,453.6pts yesterday.

Hotel Chocolat recovered 6.1% to 122p after its profits warning and share price fall on Friday.

Other risers included THG, up 2.6% to 78p, Sainsbury’s, up 2.6% to 263.9p, Cranswick, up 2.2% to 3,270p, Just Eat, up 2.2% to 1,085p, Pets at Home, up 1.9% to 371.8p and Kerry Group, up 1.9% to €87.05.

Fallers included Greencore, down 4.5% to 72.3p, Hilton Food Group, down 4% to 623p, AG Barr, down 2.6% to 457.5p, Coca-Cola Europacific Partners, down 2.5% to 58.5p, FeverTree, down 2.4% to 1,220p and Naked Wines, down 2.3% to 101p.