London pre-open: Stocks to edge higher; UK retail sales dip

9th Jul 2024 07:27

(Sharecast News) - London stocks were set to edge up at the open on Tuesday as data showed a dip in retail sales.

The FTSE 100 was called to open around 12 points higher.

Investors were mulling industry figures showing that retail sales dipped slightly in June as a result of a markedly cooler summer so far.

According to the latest BRC-KPMG Retail Sales Monitor overall sales decreased 0.2% year-on-year, comparing unfavourably with the 4.9% growth seen in June last year, but still above the three-month average decline of 1.1%.

"Retail sales performed poorly in June as the cooler weather during the first half of the month dulled consumer spending," said British Retail Consortium chief executive officer Helen Dickinson.

"Sales of weather-sensitive categories such as clothing and footwear, as well as DIY and gardening were hit particularly hard, especially compared to the surge in spending during last June's heatwave."

Dickinson added that electronics sales had a better month as football fans upgraded their home entertainment systems and people replaced pandemic purchases.

"Retailers remain hopeful that as the summer social season gets into full swing and the weather improves, sales will follow suit."

Food sales showed modest resilience, growing by 1.1% year on year over the three months to June. However, that was a significant drop from the 9.8% growth recorded in June 2023 and falls short of the 12-month average growth rate of 5.5%.

Despite the slowdown, food sales experienced year-on-year growth for June.

In contrast, non-food sales faced a steeper decline, falling by 2.9% year on year over the three-month period to June, compared to a marginal growth of 0.3% in June 2023.

That decline was more pronounced than the 12-month average drop of 1.9%, while for June alone, non-food sales also saw a year-on-year decline.

In-store non-food sales decreased by 3.7% year on year over the three months to June, a notable drop from the 2.0% growth in June 2023.

That decline exceeded the 12-month average decrease of 1.5%.

Online non-food sales presented a mixed picture, with a year-on-year decrease of 0.7% in June.

That was a slight improvement over the average decline of 1.0% in June 2023 and better than the three-month and 12-month average declines of 1.5% and 2.6%, respectively.

Notably, the online penetration rate for non-food items increased to 36.2% in June, up from 35.2% in June 2023, aligning with the 12-month average of 36.2%.

"The retail industry is vital to the nation's economy as an important source of employment and investment," Dickinson added. "The industry shapes local communities and provides three million jobs across the country.

"Through its scale and reach, retail can make a huge contribution to Labour's policy goals, and the industry stands ready to work with the new government to find ways to make this happen."

In corporate news, BP said it would take a hit of up to $2bn in the second quarter relating to asset impairments and onerous contract provisions, including charges relating to the ongoing review of its Gelsenkirchen refinery in Germany.

The oil and gas giant also forecast flat upstream production in the second quarter, while its gas marketing and trading result was also expected to be average following a strong result in the first quarter.

Engineering and consulting firm Wood Group said it has signed a six-year contract with energy giant Shell to provide brownfield engineering, procurement, and construction management for the latter's Prelude floating liquefied natural gas platform facility in Western Australia.

"We are delighted to build on our 70-year global relationship with Shell to deliver integrated brownfield engineering solutions for Prelude, the world's largest floating offshore gas facility," said Wood's chief executive Ken Gilmartin.