Rolling coverage of the latest economic and financial news, on a busy morning for UK retail news Ouch! Shares in Associated British Foods have dropped by over 10% after it startled the City with a profit warning at 7am. ABF told shareholders this morning that sales growth at its Primark chain were below expections in the last 16 weeks, and that the discount clothing chain struggled in Europe and in the US. “Primark has had a challenging start to the financial year, with a mixed performance. In the UK, focused actions and investments to strengthen our customer proposition have driven improved trading and market share gains, while trading has remained weak in continental Europe. In a challenging consumer environment, our focus is on factors within our control, including initiatives now underway in Europe aimed at improving performance. We are also making good progress to deliver Primark’s medium and longer-term growth opportunities. In the UK, the focus on Thursday is on domestic matters, specifically who were the retail winners from the crucial Christmas trading period. Tesco reported earnings that missed estimates, 3Q Like for like sales were 3.1%, versus estimates of a 4.8% gain. However, sales picked up over the Christmas period, rising 3.3%. This contributed to their highest UK market share in over a decade and allowed the company to confirm its earnings guidance for this financial year at the high end of estimates. Thus, earrings were saved by Christmas for the grocer and they could be up to £3.1bn. Online sales were also strong and rose more than 11%. Overall, its earnings have not been a roaring success, although the pickup in Christmas trade is encouraging, and managing to retain the high end earnings guidance for this year could also boost sentiment towards the UK’s largest supermarket chain. Its stock price has been static for the past month, as investors wait for a driver. This earnings report may not set the world alight, but it could boost the share price later as it suggests that Tesco can maintain market share and profits in a challenging operating environment and where the UK consumer is constrained. Continue reading...