European Coke bottler Coca-Cola HBC has hiked its 2023 earnings expectations after a stronger than anticipated close to the first half of the year.

The group, which is primarily focused on eastern Europe, said performance in June, one of its most significant months, was “very good overall”.

As a result, it now expects to deliver strong organic EBIT growth in the first half, led by operating leverage from double-digit top line growth, reflecting strong gains through pricing and mix.

As a result, the group now expects organic EBIT growth for 2023 of 9%-12% – a significant upgrade from the previous –3% to +3% range.

Mid-term guidance from 2024 onwards is unchanged.

The group expects average annual organic revenue growth of 6%-7% and average annual organic EBIT margin expansion of 20-40 basis points per annum.

CCH’s half-year 2023 results will be published on 9 August.

The group’s shares are up 2.6% to 2,315p on the news.

Morning update

Following May’s poor performance, total retail sales recorded modest growth in June, with like-for-like sales increasing just 1.9% according to new data from accountancy and business advisory firm BDO.

According to BDO’s latest High Street Sales Tracker, total like-for-like sales in June grew 1.9% from last year’s base of 8.4%.

However, sales growth remains well below CPI inflation, meaning sales volumes have fallen significantly as consumers continue to tighten the purse strings.

Sophie Michael, head of retail and wholesale at BDO, said: “The retail sector has recorded yet another month where sales volumes have come in well below inflation. Like-for-like sales growth has failed to exceed the rate of inflation every month since July 2022.

“As the government attempts to reach its target of halving inflation by the end of the year with a continued cycle of interest rate rises, we expect to see discretionary spend and sales volumes fall even further as rate rises begin to take effect and more households are hit by significantly higher mortgage and rent payments. The competition for the consumer purse has never been more important.”

Following last month’s negative set of results, the homeware sector continued its poor performance into June. Total homeware LFL sales fell by –0.6% this month from a negative base of –8.8% for the same month last year.

Total LFLs across the fashion sector grew just 3% in June, buoyed by a spike in in-store sales (7.2%), due to the increase in high street footfall during the warm weather.

The lifestyle sector also saw limited growth, with total LFLs rising by 2.3% across the month from a base of 6.9%. This marks the category’s seventh consecutive month of positive LFL sales.

Michael added: “Reports of insolvencies in the retail sector have increased significantly recently, which reflects the severity of the situation. The retail sector is a vital cog in the UK’s economic engine. It is a major employer and requires urgent support to prevent further decline.

“Retailers, like others in the wider consumer markets sector, are also facing labour supply challenges, which have been compounded by post-Brexit restrictions on the movement of workers. Retailers are having to pay more to retain their workforce and compete hard for new talent in the market. The increased costs add further fuel to the ongoing inflationary pressures.  Whilst the chancellor has announced some measures in his recent statements to help encourage parents and some of those who had taken early retirement to return to work, these have not yet made a significant impact.

“While such actions may go some way to mitigating the adverse impacts, given the stubborn levels of inflation on essential spend, retailers will have to continue to focus on closely managing their cost base and how best they can drive top line revenue. It is likely the gap for retailers between the winners and losers will only widen as the year progresses.”

Meanwhile, UK footfall fell back in June, according to the monthly BRC-Sensormatic IQ.

Total UK footfall decreased by –1.9% in June year on year, up from –2.8% in May, albeit worse than the three-month average increase of –1.1%.

High street footfall increased by 0.6% in June up from –0.5% in May.

However, retail parks saw footfall decrease –2.6% (up from –4.1% in May) and shopping centre footfall decreased by –4.2% in June (up from –4.8% in May).

Helen Dickinson, CEO of the British Retail Consortium, said: “Footfall was down on June last year as the hot weather meant people opted to enjoy the outdoors. Shopping patterns are still finding a new balance, as the high cost of living is affecting people’s habits and choices. We saw fewer visits to shopping centres and retail parks than last year. But high street locations were busier and footfall in major cities also improved, thanks to an increase in international tourism.

“The UK is the only European destination without tax-free shopping: government must capitalise on the uptick in tourism by reintroducing VAT relief for overseas visitors to boost the UK’s attractiveness compared to other destinations and stimulate spending. Government should also seek to mitigate the impact of the slew of cost pressures continuing to bear down on the industry, including new regulation and an inflationary whack to business rates next spring.”

Andy Sumpter, retail consultant EMEA for Sensormatic Solutions, added: “We saw the far-reaching ripple effect of April’s UK inflation peak taking hold this month, with the three-month rolling average for UK footfall in June dipping down into negative figures (–1.1%) for the first time this year.

“While UK shopper traffic made a marginal gain in June compared to May, which will be some positive news for retailers, the ongoing cost of living pressure is set to continue to impact shopper behaviour and undermine consumer confidence. However, with the tide of food price inflation looking like it is finally – albeit slowly – starting to recede, retailers will be looking ahead to July, and hoping to benefit from ambient footfall from the school holiday period.”

On the markets this morning, the FTSE 100 is down another 0.6% to 7,235.4pts on the back of yesterday’s losses.

Fallers include Just Eat Takeaway.com, down 5.8% to 1,105p, Tesco, down 1.3% to 246.1p and Deliveroo, down 1.3% to 110.1p.

As well as CCH, risers include Virgin Wines, up 3.5%, Nichols, up 1.7% to 1,025.4p and Ocado up 1.6% to 561.8p.

Yesterday in the City

The FTSE 100 slumped 2.2% yesterday back to 7,280.5pts on macroeconomic concerns over rising interest rates and persistent inflation.

Heavy fallers included THG, down 7.4% to 79.7p, PayPoint, down 6% to 436p, Just Eat Takeaway.com, down 5.3% to 1,173p, Naked Wines, down 4.6% to 84.5p, Pets at Home, down 4.1% to 358p, WH Smith, down 3.7% to 1,469p, and Marks & Spencer Group, down 3.5% to 185.9p.

The day’s few risers included Greencore, up 3.3% to 80.6p, Domino’s Pizza Group, up 1% to 278.2p, C&C Group, up 0.5% to 132.4p, and Kerry Group, up 0.4% to €87.35.

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