UK retailer is pessimistic in 2023
2023.01.09 03:27
UK retailer is pessimistic in 2023
Budrigannews.com – Next week’s updates from Britain’s largest retailers, such as Tesco (OTC:), Marks & Spencer and Sainsbury’s (OTC:) are anticipated to confirm that consumer demand is expected to weaken in 2023, reducing profit, despite the fact that Christmas was not the disaster that some had feared.
European retailers were concerned that the key trading period might be the worst in at least a decade prior to Christmas.
However, retailers in Britain that have reported on festive sales thus far, including clothing retailer Next, fast food chain Greggs, discounters B&M, and Aldi UK, have performed well despite inflation in the UK at 10.7% and consumer confidence close to record lows.
Even though train and postal worker strikes caused some trade disruptions, Christmas 2022 was the first Christmas without COVID-19 restrictions since 2019 and Britons appear to have prioritized spending on the holidays.
However, the government’s budget watchdog has predicted the greatest decrease in living standards since records began in the 1950s, indicating that the consumer outlook for 2023 is poor.
Next, widely regarded as an indicator of the UK consumer economy, predicted a decline in sales and profit in 2023.
As Christmas credit card bills arrive, it is likely that the strain on household budgets in Britain will begin to show this month.
This year, the price of essential goods like food and energy, in particular, will continue to rise.
They will also have to deal with higher mortgage costs as their fixed interest rate deals expire, as well as reduced government support for household energy bills and some higher taxes.
PROFIT DECLINE Monthly till data from market researcher Kantar has already shown that Tesco and Sainsbury’s grocery sales increased by 6.0% and 6.2%, respectively, in the Christmas quarter, despite a decrease in volumes; consequently, the likely focus of their own updates will be the outlook for profits.
Clive Black, an analyst at Shore Capital, stated, “We sense that the UK supermarkets have gained overall share of retail expenditure in December as people focused on food and beverages in particular.”
The majority of analysts anticipate Tesco to reaffirm its October guidance for a retail adjusted operating profit of 2.4-2.5 billion pounds in 2022-23, down from 2.65 billion pounds in 2021-22.
Currently, Sainsbury expects an underlying pretax profit of 630 million to 690 million pounds in 2022-23, down from 730 million pounds in 2021-22.
Due to its ownership of the Argos general merchandise business, Sainsbury’s is seen as more vulnerable to pressure on consumers’ disposable income, according to analysts.
Analysts at Barclays (LON:) anticipate that Marks & Spencer, a clothing and food retailer, will also report an increase in sales. estimating a 4.7% increase in food sales and a 5.7% increase in clothing and home goods sales during the Christmas quarter.
It is likely that M&S’s apparel division benefited from the severe cold snap in December, which Next reported significantly increased sales.
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However, M&S has already predicted a decline in profit for the 2022-23 fiscal year, citing a “gathering storm” of rising costs and strained household budgets in November.
