Debenhams Dumped on Retail Woes

Tuesday, March 5: The FTSE 100 started the day in the green led by a good earnings report for GVC, following a weak session in Asia as investors remained cautious ahead of any further news regarding Sino-US trade talks.

Debenhams fell 12% at the open as it announced a profit warning for FY2019, falls in year-to-date gross transaction value of -5.9% and meagre online retail growth(2.0%). The retailer talked down previous guidance given on 10 January, stating that full year profits will no longer hit analysts’ expectations of c.£8.2m. Like-for-like sales for the 26 weeks to March 2 were down 5.3%. The Group did not moderate expectations for the closure of stores, with 50 still earmarked to go in the medium term or sooner. CEO Sergio Bucher also noted that concessions would be required from landlords and local authorities to address rent & rate levels, alongside lease commitments.

Data from the British Retail Consortium indicated Britons reigned in consumer spending in February ahead of Brexit as shoppers focused on buying and stockpiling food, rather than non-essential items. Total sales edged up by an annual 0.5%, a sharp slowdown from the 2.2% growth seen in January. Separately, Barclaycard said its broader measure of consumer spending rose by 1.2%, the weakest increase since the company began recording spending on its cards in 2015.

Retail on the continent proved to the contrary as EU statistics office Eurostat noted retail sales in the 19 countries sharing the euro rose 1.3% month-on-month in January after a 1.4% drop in December. Despite a rise in real incomes over the past year, shoppers were reluctant to spend in February, constraining growth.

At the close European equities were higher, with the FTSE 100 +0.69 %, the CAC 40 +0.21% and the DAX 30 +0.24%.

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