City talk

A roundup of financial news from industry players

Rosey high street view

Marks & Spencer's boss Sir Stuart Rose reckons that consumer confidence on the High Street could be "stabilising". M&S reported a smaller-than-expected fall in first-quarter sales over the 13 weeks to 27 June.

Sales dropped by 1.4% at a time when the market expected a drop of 1.8-3%. Food sales fell by 0.5% compared to a consensus expectation of minus 2.1%. Total M&S sales in the UK, including new stores, rose by 1.7%, although the timing of Easter provided a boost to this with a rise of 0.7% in the food division. The rise in food sales arose from improved 'value, availability and product innovation, which delivered a better performance for the third consecutive quarter. M&S' sales were helped by its recent 125th birthday marketing campaign and by the hot weather. Sales at M&S' overseas stores rose by nearly 16%, while sales from the online division increased by 28%.

Waitrose also on rise

Waitrose, the John Lewis-owned supermarket chain, reported that like-for-like sales over the 13 weeks to 7 June rose by 3.5%. Annual sales growth is up by 7%.

Discount food stores see growth slow

Discount food store groups Aldi and Lidl have seen their sales growth slow, as the big supermarkets, such as Tesco, introduce Aldi-style discount products.

According to the latest 12-week data from market research firm TNS Worldpanel, Aldi's share of the grocery market rose by 8.7% over the 12 weeks to 14 June and Lidl's rose by 7.5%. While sizeable, the increases are well down on those seen last year when Aldi's monthly market share grew by 19.5% and Lidl's grew by 14.3%. By way of comparison, Tesco grew its share by 6.2% over the 12-month period, Asda's share rose by 8.2% and Sainsbury's grew by 8.9%. Wm Morrison's share rose by 9.3%.

In total, supermarkets grew their sales by 6.5%.

Cranswick shares fall despite bullishness

Cranswick, the sausage manufacturer, saw a fall in its share price, despite broker FinnCap making bullish noises that the company should benefit from the heatwave as a result of increased sales of its barbecue products.

FinnCap has set a target price of 691p for the shares.

Ombudsman plan set aside

Plans for a voluntary supermarket supremo, who would oversee the relations between big supermarket groups and their suppliers are close to being kicked into touch due to objections from the UK's big four supermarkets.

The Competition Commission, which needed the support of the big four supermarket chains to establish an ombudsman for the food sector will probably hand over the creation of a food supremo to the Department for Business, Innovation and Skills. The involvement of the latter will establish a regulator as a compulsory body with enforceable powers.

The Competition Commission concluded that a supermarket regulator is needed after it found evidence of harsh treatment of suppliers in its latest investigation into retailers' practices which finished last year.

The big four supermarkets - Tesco, Asda, Sainsbury's and Morrisons - have strongly objected to the creation of such a watchdog as it would be expensive and difficult to enforce. Retail trade body the British Retail Consortium criticised the establishment of an ombudsman as expensive and unnecessary, taking the view that customers will be the ultimate losers.

Dealers reckon the whole matter will be kicked into touch for some time to come, as there are other, more pressing issues, to be resolved - such as a forthcoming general election.

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