LONDON BRIEFING: Retail Footfall Decline Eases As Consumers Re-Emerge

(Alliance News) - The decline in UK retail footfall eased in June, numbers on Friday showed, as ...

Alliance News 10 July, 2020 | 7:56AM
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(Alliance News) - The decline in UK retail footfall eased in June, numbers on Friday showed, as easing of lockdown boosted the embattled sector.

UK retail footfall was down 63% annually in June, data from the British Retail Consortium-Shopper Trak monitor showed. It was a 19 percentage point improvement from May's reading.

In the first two weeks of the month, the average footfall decline was 77%, though this improved to 53% in the final weeks of June, BRC noted.

The UK lockdown eased during the month, allowing the non-essential retail sector to reopen in England on June 15.

BRC Chief Executive Helen Dickinson said: "With lockdown measures easing, consumers are slowly re-emerging onto their high streets, shopping centres and retail parks. Footfall levels are still well below pre-coronavirus levels; however, the decline was softer than it was in May thanks to the reopening of non-essential retail stores on June 15.

"Retail parks have performed the best because they have a broad mix of retailers, more space and on-site parking, however, high streets and shopping centres are quickly catching up. UK recovery has been sluggish, especially compared with European standards, but retailers with stores remain hopeful that the reopening of hospitality will provide a welcome boost."

During June, footfall in high streets fell 65% year-on-year, with decline tempered at 58% after the lockdown eased.

Shopping centre footfall was 68% lower annually, "most negatively affected location", BRC noted, making social distancing more difficult.

Retail parks however, had a 34% decline, helped by "wider open spaces, a higher proportion of supermarkets and larger stores".

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: called down 0.7% at 6008.50

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Hang Seng: down 2.2% at 25,623.91

Nikkei 225: closed down 1.1% at 22,290.81

DJIA: closed down 361.19 points, 1.4%, at 25,706.09

S&P 500: closed down 0.6% at 3,152.05

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GBP: down at USD1.2588 (USD1.2615)

EUR: soft at USD1.1266 (USD1.1297)

Gold: down at USD1,797.00 per ounce (USD1,802.20)

Oil (Brent): down at USD41.74 a barrel (USD42.33)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Friday's Key Economic Events still to come

Germany Balance of payments

1000 CEST France IEA oil market report

1000 CEST Italy Industrial production

0830 EDT Canada Labour force survey

0830 EDT US PPI

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Japanese producer prices returned to monthly growth in June, data from the Bank of Japan showed on Friday. In June, producer prices rose 0.6% after a 0.5% fall in May. The last time the producer price index posted a month-on-month gain was January, when prices rose 0.1%. Annually, prices fell 1.6% in June, but this was slower than the 2.8% fall recorded for May and the 2.4% fall seen in April.

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The US has approved the sale of 105 F-35 stealth aircraft to Japan for an estimated USD23.11 billion. Japan had asked to buy 63 F-35A, the traditional version of the electronics-laden fighter aircraft, and 42 F-35B, the short-takeoff and vertical-landing version for aircraft carriers, the State Department said in a statement. Washington gave its green light to the transaction, which will improve "the security of a major ally" in the Asia-Pacific region, the statement noted. Japan's 2020/2021 defence budget is a record USD50.3 billion, aimed at funding purchases of fighter jets and missile defence as the country eyes the threat from North Korea and China. In response to the rapid modernization of the Chinese military, Japan has decided to acquire a total of 105 F-35A aircraft over the next decade, in addition to 42 F-35B aircraft. At the end of 2018, the Japanese government approved a five-year defence plan that includes the entry of two aircraft carriers into its arsenal – a first since the end of World War II.

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The powerful sister of North Korean leader Kim Jong Un said Friday there was "no need" for another summit with the US unless Washington offered a "decisive change" in approach. Kim and US President Donald Trump first met in Singapore two years ago but talks over Pyongyang's nuclear arsenal have been stalled since their Hanoi summit collapsed in early 2019 over what the North would be willing to give up in exchange for sanctions relief. Trump said this week he would "certainly" meet with Kim again "if I thought it was going to be helpful", after speculation that he might pursue another summit if it could help his re-election chances in November. But in a statement carried by the official Korean Central News Agency, Kim Yo Jong – who has emerged as one of her brother's closest advisers – said: "There is no need for us to sit across with the US right now." If a summit was held, she said, "it is too obvious that it will only be used as boring boasting coming from someone's pride". Denuclearisation, she added, was "not possible at this point", and could only happen alongside parallel "irreversible simultaneous major steps" by the other side – which she emphasised did not refer to sanctions lifting.

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The US on Thursday posted 65,551 new coronavirus cases, a record for a 24-hour period, according to a tally by Johns Hopkins University. The country, the hardest-hit in the world by the pandemic, has a total caseload of more than 3.1 million, with 133,195 deaths. The previous daily record was Tuesday, with more than 60,200 cases in one day. The US has seen a spike in infections in recent weeks, particularly in the south and west, and health experts worry the death rate may soon follow the same trajectory. According to the Johns Hopkins tracker at 0030 GMT Friday, 1,000 people died from Covid-19 in the US in the last 24 hours.

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The World Health Organisation has warned the coronavirus pandemic has still not reached its peak – as lockdown measures are relaxed in the UK to make international travel easier. The director general of the WHO, Tedros Adhanom Ghebreyesus, said the virus is not under control "in most of the world" and is in fact "getting worse". His stark message comes as quarantine rules for people returning to or visiting the UK from certain countries are relaxed from Friday. The UK government has published a list of 76 countries and territories from which people arriving into England will no longer need to self-isolate for 14 days. Ghebreyesus said the total number of cases of coronavirus worldwide has doubled in the last six weeks.

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COMPANIES - FTSE 250

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Gym Group confirmed it will be re-opening its 160 gyms in England on July 25, with its 13 sites in Scotland and Wales to follow "as soon a possible", when local restrictions are lifted. UK Culture Secretary Oliver Dowden on Thursday allowed the reopening of swimming pools, gyms and outdoor arts performances in the latest easing of the coronavirus lockdown in England. Gym Group said it saw a "significant" number of cancellations when gyms were forced to shut in mid-March, but as of Friday had 692,000 members, down from 870,000 at March 18. The gym operator said its own research indicates 92% of its members are keen to return to the gym.

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Restaurant Group said it has agreed GBP50 million from the UK government's CLBILS scheme. The deal has added GBP10 million to the company's overall debt facilities. The restaurant operator has also now started a phased reopening of its restaurants and pubs for eat-in trade in line with government guidance. Restaurant Group's current reopening plans will see 25% of its restaurants open by the end of July, 60% reopened by the end of August and 90% by the end of September. The company noted the remaining 10% is not expected to open in 2020 reflecting locations where footfall is anticipated to remain "considerably weak".

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London-focused property investor Great Portland Estates said it has collected 69% of its quarterly rent owed in June, with monthly rent collected at 66%. During the quarter to June 30, Great Portland Estates said it signed four new leases and renewals generating GBP4.3 million in annual rent, and noted its vacancy rate at the quarter-end stood at 3.3%. Chief Executive Toby Courtauld said: "Whilst the lockdown has started to ease and our office pre-letting momentum remains healthy, Covid-19 is disrupting the activities of many of our existing occupiers, which in some instances is impacting their ability to meet their rental payments." Courtauld said the firm is "well positioned" despite the "challenging" conditions.

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Aerospace & defence component manufacturer Senior said its trading activity in the second quarter was "significantly slowed" across both its Aerospace and Flexonics divisions, as customers temporarily closed their facilities and lowered production rates. As a result, Senior is guiding for its first half revenue to be down 30% year on year, and margins to be "significantly" lower. Despite this, the company noted its underlying cash performance has been "robust", with net cash inflow during the quarter of GBP3 million. Net debt at the end of June is expected to be around GBP239 million, with GBP162 million of headroom. In an attempt to reduce costs, Senior has embarked on a restructuring process which has seen the company lay off 12% of its workforce during the first half, with about 19% of staff currently furloughed. A one-off charge of GBP35 million is expected, but Senior hopes to save GBP35 million from the restructuring. "Whilst we expect that the structural long-term drivers of our end markets will remain in place, trading for the rest of 2020 continues to be impacted by Covid-19. As a result, guidance for 2020 remains suspended," Senior added.

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COMPANIES - GLOBAL

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Hamburg-based Nordex has received a turbine order for a wind farm in Spain. Nordex will supply and install N149/4.0-4.5 turbines in 4.8 megawatt operating mode for the 312 megawatt Gecama wind farm. The customer is Enlight Renewable Energy, an Israeli power utility using renewable energy. Gecama is the first project in Spain for the company, which operates in Israel and Europe, and the first joint project with the Nordex. Overall, Gecama will be Spain's largest wind farm to date with the electricity generated being sold at market price. The order also includes a premium service contract covering a period of 20 years, the German wind turbine manufacturer said.

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Friday's Shareholder Meetings

Urban Logistics REIT

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By Tapan Panchal; tapanpanchal@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Gym Group (The) PLC 130.40 GBX -2.25 -
Restaurant Group (The) PLC 40.76 GBX -7.78 -
Senior PLC 44.30 GBX -15.13 -
Great Portland Estates PLC 596.20 GBX 1.12 -
Nordex SE 10.70 EUR 21.94 -

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