What to Watch: Weak Christmas for retailers, Ryanair boost, UK household debt

Edmund Heaphy
Finance and news reporter
A B&M discount retail outlet store in Southend on Sea, near London. Photo: John Keeble/Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Christmas woes hit UK retailers

Discount retailer B&M said on Friday that the “challenging” UK retail market was one of the factors that explained slower-than-expected sales performance in the run up to Christmas.

Largely thanks to 15 new store openings, revenue growth in the UK in the three months to 28 December came in at 8.8%. But growth at existing B&M stores was a meagre 0.3%.

The update from B&M comes after several UK retailers this week warned that a weak Christmas period had dented their bottom lines.

Superdry on Friday issued its fourth profit warning in 18 months, saying that underlying profits could be wiped out due to poor consumer spending and discounting at competitors.

Superdry admitted that a strategic push to end widespread discounting and get people paying full price had contributed to the lower than expected sales over Christmas.

A shortage of better selling items also hit the company. New CEO Julian Dunkerton made the decision to reduce the level of inventory held by Superdry in warehouses when he came in last April. 

Iconic retailers Marks & Spencer and John Lewis on Thursday reported weak growth.

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Bumper Christmas and New Year boost Ryanair

Ryanair (RYA.L) on Friday said that full-year profits would come in higher than expected, largely due to a bumper Christmas and New Year period and strong forward bookings.

In an unscheduled trading update, the low-cost airline said that it had more “close-in” bookings than it expected, meaning that customers chose to book closer to the time of departure. It also said that yields were better than expected.

Forward bookings for the January to April period are also 1% ahead of this time in 2019, Ryanair said.

The company said that it therefore thought it was “appropriate” to raise its full-year guidance, with after-tax profits now expected to come in between €950m (£808m, $1.05bn) and €1.05bn.

Ryanair had previously guided a range of between €800m and €900m.

UK household debt hits record high

Average UK household debt hit a record high of £14,450 last year as more families borrowed “just to scrape by,” new research suggests.

Total debt excluding mortgages reached £407bn in the third quarter of 2019, up 31% on levels reached during the financial crisis in 2008, according to analysis by the Trades Union Congress (TUC).

Debt levels as a proportion of household income have also risen above their 2008 peak for the first time in the past year, reaching 27.5% of earnings, the TUC found.

The average household’s debt was £430 higher than one year earlier.

Frances O’Grady, TUC general secretary, said the increase was “not about keeping up with the Joneses,” with years of wage stagnation and a growth in insecure jobs blamed.

Markets shrug off fresh Iran tensions

Markets largely shrugged off fresh tensions in the crisis over Iran on Friday morning despite suspicions growing Iranian missiles may have brought down a Ukrainian plane.

The European Stoxx 600 index and three major US stock market indices all reached record highs on Thursday, and were trading close to flat or higher in early trading on Friday.

Nasdaq futures (NQ=F) were trading 0.2% higher at around 8.50am in London, while S&P (ES=F) and Dow Jones (YM=F) were trading 0.1% higher.

In Europe, the German DAX (^GDAXI) and the FTSE (FTSE) treaded water, while the Stoxx 600 (^STOXX) was down less than 0.1%. The French CAC 40 (^FCHI) slid 0.2%.

Meanwhile oil and gold prices, which rose immediately after the US killing of an Iranian general last week, were both down on Friday. Brent crude (BZ=F) and gold futures (GC=F) were trading 0.2% lower.

Sterling was down marginally against the dollar (GBPUSD=X) in morning trading on Thursday. The currency was up slightly against the euro (GBPEUR=X).