UK Retail Sales Drop; Stocks Fall

Arthi Gupta
16 Sep, 2010
New York City

The UK indexes dropped after retail sales fell in August. Food stores fell 0.5% and non-food stores dipped 0.7% in August. The Confederation of British Industry estimated manufacturing growth in the next three months. Kesa Electricals plc four-month sales increased 8.2%.

[R]4:15 PM London – The UK indexes dropped after retail sales fell in August. Food stores fell 0.5% and non-food stores dipped 0.7% in August. The Confederation of British Industry estimated manufacturing growth in the next three months. Kesa Electricals plc four-month sales increased 8.2%.[/R]

In London, FTSE 100 Index traded lower 12.66 or 0.23% to 5,542.90 and the pound edged lower to close at $1.5599.

The UK retail sales declined in August, the first decline in since January on the fall in both food and non-food store sales. Sales volume including automotive fuel dipped 0.5% in August from a revised 0.8% increase in July, the Office for National Statistics said today. The growth rate for July was revised down from 1.1% due to index rebasing and seasonal adjustment changes.

Food stores fell 0.5% and non-food stores dipped 0.7% in August.

British manufacturers expect production to increase in the coming three months due to the improvement in overall demand and the need to replenish stocks, the latest monthly Industrial Trends Survey from the Confederation of British Industry showed today.

About 27% of respondents said output will rise, compared with 16% forecasting the fall. The resulting balance of plus 12% was similar to expectations in August, and an improvement on positive 6% in July.

Nearly 20% of manufacturers said that total orders were above normal and 37% said orders were below. The resulting balance was negative 17%, down from negative 14% in the prior month.

Britons slightly raised their expectations of inflation over the next one year, according to a new survey released from the Bank of England today.

The Bank of England - GfK NOP Inflation Attitudes survey showed that the consumers now expect inflation to average 3.4% in the next year, compared with the 3.3% rate predicted in May. The current rate of inflation was estimated at 3.6%, unchanged from the last survey.

OpenTable, Inc. signed an agreement to acquire the entire issued share capital, including outstanding options of UK-based restaurant reservation site, toptable.com for about $55 million in cash. The transaction is expected to close in the fourth quarter of 2010 and OpenTable plans to fund the acquisition with existing cash, cash equivalents and short-term investments.

OpenTable believes it will incur about $500,000 in non-recurring transaction and integration costs in each of third and fourth quarter or a total of $1 million through the end of the year.

Focus Solutions Group plc, a provider of multi-channel distribution software to the global financial services industry, announced extension of contract worth about £1.0 million with HSBC Plc.

Pursuant to the terms of the deal, HSBC will be extending its wealth management financial planning system, which was initially developed by Focus Solutions. The extension of the system will be rolled out to over 600 users from January 2011.

Gainers & Losers

Booker Group Plc dropped 0.14% to 48.68 pence after the food wholesaler said business performance in the second quarter was in line with expectations, highlighting a 6.1% rise in total sales compared to last year. On a like-for-like basis, total sales rose 5.9%. Looking ahead, the company said its outlook for the year as a whole remains unchanged.

Chemring Group plc dropped 0.03% to 2,949.00 pence after the missile-defense company issued an Interim Management Statement covering the period from May 1 to date. The company said that revenue for the four-month period ended in August increased 23% to £176 million £143 million in the same period last year. The company further said that its order book is currently £819 million, an increase of 43% from the same time last year.

Dunelm Group plc declined 2.10% to 387.70 pence after the specialist out-of-town homewares retailer announced revenue for fiscal 2010 rose 16.3% to £492.84 million from £423.78 million in the previous year. Like-for-like sales increased 8.0% on a 52 week basis and new space contributed a further 10.2%. Profit before taxation for the year increased 44% to £76.76 million from £53.49 million in the prior year.

In a separate communiqué, Dunelm Group said its Chief Executive, Will Adderley decided to resign from February 2011, when he will assume the new role of Executive Deputy Chairman, a full-time Board position.

Gulfsands Petroleum plc fell 1.36% to 290.75 pence after the independent oil and gas exploration and production company reported first-half revenues soared 81% to $52.5 million from $28.98 million in the year-ago period. Profit for the period surged 385% to $18.73 million or 15.09 cents per share from $3.86 million or 3.23 cents per share in the comparable period last year.

Halfords Group plc declined 1.64% to 474.80 pence after the automotive products retailer said finance director Nick Wharton will leave the company on November 30 to become chief executive designate of Dunelm Group plc.

Kesa Electricals plc advanced 1.70% to 137.70 pence after the company engaged in the retailing of electrical products and related services in its interim management statement for the period from May 1 to July 31 stated total revenue growth of 8.2%, up 4.3% on a like-for-like basis, driven by a successful World Cup campaign and 28% growth in Web-generated sales.

Kier Group Plc surged 3.83% to 1,112.00 pence after the civil engineering and support services company announced preliminary results for fiscal 2010. Full-year revenues declined 2.4% to £2.06 billion from £2.11 billion last year. Profit in the period increased 147% to £39.7 million or 107.3 pence per share compared to a profit of £16.1 million or 44.0 pence per share a year ago.

Kingfisher plc rose 0.55% to 220.10 pence after the home improvement retailer reported first-half sales fell 0.9% to £5.45 billion from £5.50 billion in the prior-year period. Net profit in the period rose 24.4% to £250 million or 10.5 pence per share compared with net profit of £201 million or 8.5 pence a year ago.

Robert Wiseman Dairies Plc plunged 28.32% to 348.00 pence after the company engaged in processing and distribution of milk and associated products in its interim management statement and trading update for the 23 weeks up to and including September 11 said it expects financial performance in the first-half year to be “broadly in line with expectations.”

The company stated that overall milk sales rose 8.5% from last year, with sales benefiting from volume gains made in the previous year.

United Business Media Ltd. surged 5.63% to 638.00 pence after the global business media company reached an agreement to acquire Canon Communications LLC from Spectrum Equity Investors and Apprise Media LLC for $287 million, which is about £185 million at the exchange rate prevailing on September 15.