Sainsbury’s sales slow despite Euro 2024 boost; eurozone inflation expected to slow – business live

Shares in the Shoe Zone lost nearly a fifth of their value after the shoe retailer downgraded its profit forecast again, blaming higher shipping costs due to Red Sea disruption and poor weather.

The shares fell as low as 120p and later traded down 16% at 130p.

The retailer now expects adjusted profit before tax for the year to 2 October to be around £10m. It had already cut its profit outlook to £13.8m in May, as it was hit by shipping delays and higher wage costs following the National Living Wage increase.

Today, Shoe Zone said container prices had risen “significantly” over the last six months, as a result of the reduction in the number of shipping vessels and the additional costs of rerouting away from the traditional Suez Canal route.

Alongside this, spring and summer sales had been weaker than expected between April and June due to “unseasonal weather conditions”.

Last week, the company was hit by a cyber attack when hackers gained “unauthorised access to certain online systems and data”. Its website has remained operational and Shoe Zone has continued to trade with its customers and suppliers.

Britain’s next government is poised to benefit from easing pressure on household finances after a slowdown in inflation in stores and a fall in fuel prices, but costs remain “too expensive” for many families.

Figures from the British Retail Consortium (BRC) show that annual UK shop price inflation cooled last month to 0.2%, down from 0.6% in May – the slowest pace since October 2021 – as retailers cut the prices of many of their key products, including butter and coffee.

Coming before Thursday’s general election, separate figures from the RAC show that petrol and diesel prices fell for a second straight month in June to ease pressure on families affected by the cost of living crisis. The organisation said, however, that filling up on the forecourt was still “too expensive” in England, Wales and Scotland.

According to the RAC’s monthly fuel watch, the average price of petrol in the UK at the end of June was just under 145p a litre, down from 148p at the start of the month. Diesel dropped from nearly 154p to about 150p.

“Fuel prices are still nowhere near where they should be despite falling for the second consecutive month,” the RAC said. It highlighted the lower cost of filling up in Northern Ireland, where petrol is 4.5p a litre cheaper on average and diesel 8p cheaper than in the rest of the UK.

The RAC’s head of policy, Simon Williams, said:

While it’s good news prices at the pumps have fallen for the second month in a row, this also leaves a bad taste in the mouth because we know drivers in Great Britain are continuing to get a raw deal as both petrol and diesel are still much more expensive than in Northern Ireland.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Sales at Sainsbury’s have slowed despite a 25% jump in people buying TVs during Euro 2024, partly because of a big drop in sales at its Argos chain.

Food inflation has eased, and the supermarket group battled a “tough trading backdrop” on clothing and general merchandise amid poor weather and the cost of living crisis.

Like-for-like sales (at stores open at least a year), excluding fuel, slowed to 2.7% in the 16 weeks to 22 June, from 4.8% in the previous quarter.

Food sales growth eased to 4.8% from 7.3% as inflation across the market eased.

Argos sales plunged by 6.2% in the latest quarter, because people bought less garden furniture, paddling pools and other seasonal products than last year due to cold and wet weather. Sales electronics such as video games were also weak.

Sainsbury’s said:

Consumers continue to shop general merchandise more cautiously but respond to value.

More positive signs are coming through now in general merchandise with the better weather and the Summer of Sport ramping up.

As the warm weather hit last week, people immediately stocked up on cooling and garden products. Sainsbury’s said it sold more fans in one week than it had in the year to date. Thanks to the euros, TV sales have surged, as fans upgraded to better sets ahead of the big matches.

The supermarket chain stuck to its forecast of a retail underlying operating profit of between £1.01bn and £1.06bn this year, up between 5% and 10% from last year.

Later this morning, we’ll be getting ‘flash’ inflation figures for June from the eurozone.

Inflation in the 20-nation eurozone is expected to have fallen slightly, to 2.5% from 2.6% in May.

Eurostat, the European Commission’s office, will release the data at 10am BST. The core rate, which excludes volatile items like food and energy, is forecast to have eased to 2.8% from 2.9%.

The Agenda

• 10am BST: Eurozone inflation for June (forecast: 2.5%)

• 2.30pm BST: European Central Bank president Christine Lagarde speech

• 2.30pm BST: US Federal Reserve chair Jerome Powell speech