High street clothing retailer Next is helping lift the FTSE 100, with shares rising 8% despite fresh lockdown measures.
That’s because investors are focusing on its strong Christmas trading figures instead. My colleague Zoe Wood explains:
Next has emerged as a winner from a tough Christmas period as sales transferred from shuttered stores to its website but the fashion chain warned new lockdown measures would wipe out the extra profit it had made.
The retailer’s chief executive Simon Wolfson said profit from better than expected sales in November and December would be almost entirely offset by this month’s new lockdown restrictions which would force its stores to close, as well as costs stemming from the disruption to its important traditional Boxing Day sale.
The retailer said the pandemic was also delaying the arrival of container traffic from the far east. Wolfson said many of its deliveries were running two to three weeks late with its stock levels 10% lower than two years ago. Wolfson expected stock levels to “return to more normal levels by the end of March”.
Sales in the nine weeks to 26 December were just 1.1% lower than in 2019 – a far better outcome than the drop of 8% pencilled in by the company. While UK store sales tumbled 43% its online sales were up 36%.
Updated
UK equities have managed to return to positive territory.
We’re nowhere near yesterday’s gains but the FTSE 100 is holding comfortably above 6,500 and is up 0.5% so far this morning.
Even the domestically-focused FTSE 250 is up 0.25%. Elsewhere, the German DAX is down 0.2% and the CAC 40 is down 0.1%.
Correction: The FTSE 250 was up 0.25%, not 0.5%
Updated
But supermarkets are upbeat as they report their Christmas trading figures.
Strong demand for luxury Christmas favourites helped to drive an 8.5% rise in sales at Morrisons over the festive period, as the chain kicked off reporting on what is expected to be a bumper trading period for supermarkets, Sarah Butler reports.
Morrisons said online sales had tripled and growth was boosted by strong demand for festive favourites such as champagne and salmon as families made the most of the quieter festivities.
Sales in Morrisons established stores rose 7.3% in the nine weeks to 3 January but that was boosted by a 1.2% rise in wholesale sales via the retailer’s deal with Amazon and to supply convenience stores.
David Potts, the chief executive, said:
The pandemic has had a severe effect on people and communities around Britain for nine months now but it has been especially hard at Christmas time.
I’m very pleased with the way the Morrisons team has helped our customers across the nation enjoy their Christmas in the best way they could.
Morrisons shares are up 0.9% this morning.
CBI boss: Government must offer more business support before March budget
The head of the CBI business lobby group, Tony Danker, says the government cannot wait until the March budget to roll out extra support for businesses impacted by fresh Covid restrictions:
We’ve seen lockdowns before, we know the impact they have, and so I’m afraid more comprehensive restrictions do require a more comprehensive economic response.
Speaking to the BBC’s Today programme, Danker said there were three urgent issues that the government needed to address in its emergency response for businesses.
The first is restricted cash flow, which could be helped with further VAT deferrals, tax relief, and more generous government grants.
The second is probably plugging the gaps that are now further exposed again learning lessons from last year. The thing we learnt, most of all, in terms of gaps was probably the role of supply chains. You close hospitality, you also have a big knock on effect on food and drink manufacturers. You close airports and aviation, and tens of thousands of of people in the supply chain [are] affected.
And I think the third thing is underwriting support for the duration, so that firms stay the course rather than acting precipitously.
I don’t think we can wait until the budget in March to review support. Business will take a view sooner, and so I think we need to respond very soon, and not wait for the budget.
