H&M, the world’s second-biggest fashion retailer, has bucked the gloom in the retail sector with 33% growth in quarterly profit.
Sweden’s H&M beat expectations, as shoppers returned to its stores as pandemic restrictions were lifted.
The company posted a pretax profit of 4.78 billion Swedish crowns (£385m) in the second quarter, up from 3.59 billion crowns a year earlier.
Chief Executive Officer Helena Helmersson said:
“Sales in physical stores increased substantially while online continues to do well,”
“Disruption and delays still exist in the supply chain, but are gradually being eased,”
However, H&M added that sales could fall as much as 6% in June as the war in Ukraine and supply chain snags weigh.
About 7 million struggling families in the UK are living through a “frightening year of financial fear”, going without food, heating, toiletries and even showering as they try to cope with the cost of living crisis, a leading charity has said.
Many people are falling deep into debt as they try to stay afloat, using credit cards or cash from loan sharks to pay for food and other basics and building up arrears on energy bills, according to the Joseph Rowntree Foundation (JRF), an anti-poverty charity.
The extent of the crisis facing low-income households was so serious that more than 2 million households were no longer choosing between “heating or eating” because they had already gone without both, the charity said.
Katie Schmuecker, JRF’s principal policy adviser, warns:
“Our research illustrates the frightening year of financial fear low-income families are living through.
Families up and down the country have been faced with options that are simple but grim: fall behind on bills, go without essentials like enough food, or take on expensive debt at high interest. In some cases they had to do all three”.
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Recession worries are weighing on markets again today, after surging inflation hit consumer confidence in America.
Wall Street took a tumble yesterday, following data showing that US consumers’ short-term economic expectations had tumbled to the lowest level since March 2013.
The report, from the Conference Board, suggested the world’s largest economy will see weaker growth in the second half of 2022 and a “growing risk of recession by year end”.
The S&P 500 stock index shed 2%, while the tech-focused Nasdaq tumbled 3% as the recent recovery in the markets tailed off.
Hebe Chen of IG says it’s “time to face reality”.
Wall Street tumbled again last night as the US Conference Board consumer confidence data unveiled a reality that the market can’t lie to itself anymore—the current business conditions were less favourable month by month, but the worst part is almost one-third (29.5%) of consumers are expecting things just to get worse.
The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, decreased sharply to the lowest level since March 2013.
The extremely pessimistic view just highlighted the damage that has been done by the ongoing inflation pain and further consolidated the recession concerns.
European markets are set for a lower open too, with the FTSE 100 seen down around 55 points (0.6%).
Stephen Innes of SPI Asset Management adds:
The dire sentiment data suggests weaker consumer demand will intensify an earning recession that could trigger new lows.
So, the extent to which the recent US and Eurozone equity market upswing marks the cycle low or is a bear market rally depends primarily on downside earnings risks from the economy and the latest data should provide a very sobering thought.
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The squeeze on UK households has intensified, as prices in the shops jumped at the fastest pace since September 2008, just before the financial crisis.
Shop price inflation accelerated to 3.1% in June, up from 2.8% in May – a 13-year high, the latest figures from the British Retail Consortium (BRC) show.
Food inflation hit the highest in over a decade, accelerating to 5.6% in June, driven by pricier fresh food (where prices jumped 6.2% over the year, the highest inflation rate since May 2009).
The report highlights how surging prices for commodities, energy, fuel and transport are feeding through to the shop shelves.
Helen Dickinson OBE, chief executive of the British Retail Consortium, said:
Food prices rose sharply, particularly for fresh foods such as cheese which has been affected by the spiralling costs of fertiliser and animal feed.
Dickinson warned that the government may need to provide more support:
Retailers are working to find more ways to protect their customers from the worst effects of inflation, but if costs continue to spiral, Government may need to find ways to help retail businesses support their customers.”
Supermarkets are also expanding their value ranges to offer a wider choice for customers trading down and providing discounts to vulnerable groups, Dickinson added.
Yesterday, market researcher NielsenIQ reported a jump in purchases of frozen food as shoppers tried to economise, with sales of frozen poultry were up 12% compared with a year earlier.
Sales of other cheaper products also rose: sales of rice and grains rising by 11%, while canned beans and pasta were up by 10% and 9% more gravy and stock was sold. Sales of dry pasta have climbed by 31%.
Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, explains:
As inflation accelerates due to rising energy, travel and now food costs, shoppers are now more likely to cut down on out of home consumption, shop to a fixed budget, switch to cheaper private label and seek out retailers where prices are the lowest.”
- 10am BST: Eurozone business and consumer confidence reports for June
- Noon BST: US weekly mortgage applications
- 1pm BST: German inflation report for June
- 2pm BST: Bank of England governor Andrew Bailey speaks on a panel at the ECB’s ‘future of central banking’ forum, with ECB president Christine Lagarde and Federal Reserve chair Jerome Powell
- 2.30pm BST: Treasury committee hearing on the appointment of Dr Swati Dhingra to the Bank of England’s Monetary Policy Committee