M&S gains share in tough market

13 July 2011 Last updated at 08:04 GMT M&S says it has gained market share over rivals Marks and Spencer has reported sales growth and a bigger market share despite the stagnant UK clothes market.

Like-for-like UK sales excluding VAT in the 13 weeks to 2 July rose 1.7% versus a year ago, in line with expectations.

The growth was entirely driven by food sales. Non-food like-for-like sales saw zero growth - an improvement on the 3.9% fall in the previous quarter.

The retailer said it had increased its UK market share slightly in both the food and clothing sectors.

Despite the sales rise, shares in M&S fell 2.7% in early trading, reversing gains made over the previous two weeks.

'Cautious' outlook

Food sales rose 3.3% on a like-for-like basis, helping M&S to increase its market share from 3.7% to 3.8%.

The department store partly attributed this success to customers using its "Dine In" promotions to get "better value alternatives to eating out".

Continue reading the main story In the clothing sector, its share rose from 11.5% to 11.7%, its 17th consecutive month of market share gain.

It comes a day after the British Retail Consortium revealed that clothing sales across the UK - particularly for women - slumped in June, despite retailers discounting heavily and starting their summer sales early.

M&S said that it remained "cautious" about the market outlook.

"We expect trading conditions to remain challenging due to pressure on consumers' disposable incomes and higher commodity prices," it said.

The retailer reconfirmed its profit guidance for the full financial year.

International sales rose 7.8%, while M&S Direct sales - which include online - were up 13%.

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Euro debt market jitters worsen

8 July 2011 Last updated at 12:19 GMT Mr Tremonti's future is looking uncertain The cost of borrowing for debt-laden Portugal, the Irish Republic and Italy hit new highs on Friday.

Greek debts also sold off, reversing a recent rally on hopes of a new rescue.

Financial markets were reacting to the European Central Bank's decision to raise interest rates, as well as political developments in Italy.

Italian economy minister Giulio Tremonti, a key figure in shoring up the country's finances, has been drawn into a corruption scandal.

Corruption charges

There is growing speculation that the economy minister may have to step down after Neapolitan prosecutors requested an arrest warrant for his close associate, Marco Milanese, on corruption charges.

The minister - who is seen as a stalwart defender of budget discipline - is seen as increasingly isolated within the Italian government.

Prime minister Silvio Berlusconi has said he will amend Mr Tremonti's draft budget in parliament, criticising his own minister:

"He is worried about the markets, I understand him. But I always remind him that in politics the result is made up of consensus and votes. He isn't interested in consensus, but we are."

Italy has seen a sharp rise in its 10-year cost of borrowing over the last week, rising from 4.85% to 5.3% - suggesting markets now view the country as almost as risky as recession-hit Spain, which must pay 5.65%.

Short-lived respite

Meanwhile Greece, the Republic of Ireland and particularly Portugal have seen the value of their debts in financial markets plummet further.

Their implied costs of borrowing in markets for three years now stand at 28%, 16.3% and 18.6% respectively.

The latest sell-off comes as it became increasingly clear that the European Central Bank was more concerned with fighting inflation - which required an interest rate rise from 1.25% to 1.5% on Thursday - than in holding down borrowing costs for embattled governments.

It follows what had been a short-lived respite in the market. Borrowing costs had fallen briefly on expectations that the eurozone would arrange a second bail-out package for Greece after the parliament in Athens pushed through further painful austerity measures.

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Property market 'moving sideways'

30 June 2011 Last updated at 06:00 GMT There has been relatively little activity in the housing market this year The housing market has "moved sideways" in the past six months, the Nationwide has said, as house prices remained unchanged in June.

The value of the typical home was the same in June as in the previous month, but 1.1% lower than in June 2010, the building society said.

The average UK home cost ?168,205, the Nationwide said.

It expects prices to change little during the rest of the year, owing to the economic climate.

Forecast

Prices in the three months to the end of June were 0.3% higher than the previous three months, the figures - based on the building society's own mortgage data - show.

"The property market has moved sideways over the past six months, and June's data suggest that trend is being maintained through the summer months," said Robert Gardner, Nationwide's chief economist.

"It is hard to make the case for prices rising or falling sharply over the remainder of 2011 if the economy develops as we expect.

"Economic growth looks set to gather pace in the months ahead, but is likely to remain unspectacular. This in turn points to only modest gains in employment and sluggish wage increases, which will continue to keep many potential buyers on the sidelines."

He added that expectations of the Bank rate remaining at its historic low of 0.5% meant that there would not be a surge of forced sales.

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Diageo eyes China's spirit market

28 June 2011 Last updated at 05:42 GMT British drinks giant Diageo takes control of Chinese liquor firm Sichuan Chengdu Quanxing.

Drinks giant Diageo has agreed a deal that will allow it to expand its business in China's fast growing spirits market.

Diageo will acquire an additional 4% stake in Sichuan Chengdu Quanxing Group (Quanxing) for 140m yuan ($22m; ?13m), taking its holding to 53%.

The deal will give Diageo an indirect control of ShuiJingFang, a famous brand of popular Chinese spirit Baijiu.

Baijiu accounts for more than 30% of China's alcoholic drinks market.

"We are privileged to have the unique opportunity to participate at scale in super premium Chinese white spirits, one of the largest, fastest growing spirits segments in the world," said Paul Walsh, Chief Executive of Diageo.

'Iconic Chinese brand' Continue reading the main story

We have managed to quadruple the sales of ShuiJingFang in the regional duty frees in Asia in the last two years”

End Quote Gilbert Ghostine Diageo While Baijiu's popularity within China has been on the rise, Diageo said it was confident of turning the spirit into an international success as well.

"We are fully committed to build ShuiJingFang into an internationally successful iconic Chinese brand," said Gilbert Ghostine, President of Diageo Asia Pacific.

Mr Ghostine said that the brand was already being sold at 14 regional airports and three regional airlines were also carrying it.

He added that Diageo had managed to start sales of the brand at Dallas and Chicago airports and was targeting sales at two additional US airports by the end of the year.

"We have managed to quadruple the sales of ShuiJingFang in the regional duty frees in Asia in the last two years," he said.

"It is going from strength to strength," he added.

Full control

Quanxing currently holds a 39.7% stake in ShuiJingFang.

Diageo said it is seeking approval from the China Securities Regulatory Commission (CSRC) to launch a mandatory tender offer (MTO) for the remaining shares of Shuijingfang.

China's economic growth has seen its liquor market expand at a rapid pace

"Once the CSRC approval has been received, Diageo will immediately launch the MTO for the outstanding shares of ShuiJingFang in accordance with Chinese takeover regulations," the company said.

Diageo said that it would offer 21.45 yuan per share, the minimum price permitted by Chinese takeover regulations.

The company will need to pay close to 6.6bn yuan ($1bn) if all the shareholders accept its offer.

"Diageo will fund the MTO through its diversified financing sources and strong global cash generation," the company said.

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Mortgage market 'to remain flat'

20 June 2011 Last updated at 09:33 GMT The housing market has seen relatively little activity in recent months Lenders expect activity in the mortgage market to remain flat in the coming months, despite a rebound in May.

Gross mortgage lending in the UK totalled an estimated ?11.3bn in May, up 12% from the previous month, the Council of Mortgage Lenders (CML) said.

The figure was 1% higher than in May 2010, but the lenders' group said the market remained relatively subdued for house buyers.

The CML said it expected no significant upturn soon.

The figures come as the government unveils more details about its Firstbuy scheme.

The shared equity scheme aims to help 10,000 first-time buyers get on the property ladder if they buy newly-built homes.

Remortgaging

The CML's gross mortgage lending figures include loans for house purchases and remortgaging.

The total in May returned to the same level as it had been in March.

"Lending in May recovered after low activity levels in April," said CML director general Michael Coogan.

"Distorting effects from Easter and bank holidays cloud the current picture, but the likelihood seems to be for essentially flat levels of lending over the next couple of months."

However, he said that home loans for house purchases were lower than a year ago. The pick-up in remortgaging, seen in recent months, was also running out of steam as expectations of an interest rate rise this year receded.

Jonathan Samuels, chief executive of Dragonfly Property Finance, said: "Competition and appetite among lenders is returning but they are still very conservatively minded, as indeed are borrowers in the current anxious economic climate."

Pledge

Separately, details of the developers and lenders potentially to be involved in the government's Firstbuy scheme have been released.

Continue reading the main story Only available to first-time buyers purchasing a newly-built homeBuyer offers 5% deposit with additional equity loans provided by the housebuilder and the governmentFunding for the scheme will only be provided by the government for a yearThe project, announced in the Budget in March, will see loans offered to some first-time buyers purchasing a newly-built home.

Buyers must save a deposit worth 5% of their property's value, with the government and housebuilders putting up 10% each through an equity loan, enabling people to qualify for a 75% loan-to-value mortgage.

The equity loan would be interest-free for the first five years, with interest charged at 1.75% in year six, and at inflation plus 1% thereafter.

Housebuilders expected to take part include Persimmon Homes, Barratt Homes, Bovis Homes, CM Yuill Limited, Galliford Try Homes, Morris Homes Limited, Radian, and The Miller Group.

Lenders expected to take part include the Halifax, Nationwide Building Society, Barclays and the Melton Mowbray Building Society, according to the Department for Communities and Local Government.

The government's ?250m pledge, funded from a levy on the banks, will only last for one year. Of this, ?210m will be spent in England, with the rest spent in Wales, Scotland and Northern Ireland.

The scheme is less generous than the previous government's HomeBuy Direct scheme, which was considered a success by housebuilders.

The introduction of Firstbuy has not altered the CML's forecast for a relatively flat mortgage market.

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Housing market 'under pressure'

14 June 2011 Last updated at 10:10 GMT The market is set to remain subdued, lenders warn House prices and sales are still under pressure, surveys have suggested.

The government's own house price survey says UK prices fell by 1.1% in April to leave them 0.3% down on a year ago.

A survey of chartered surveyors said that potential buyers were still being put off by economic worries and continued mortgage rationing.

And despite a rise in mortgage borrowing in April, the Council of Mortgage Lenders (CML) said lending was unlikely to rise further this year.

Regional differences

The government's house price survey is published by the Department for Communities and Local Government (DCLG).

It confirms the downward trend shown in other surveys, from lenders such as the Halifax and the Nationwide, and the Land Registry for England and Wales.

The DCLG survey also highlights the widespread variation in house price trends around the UK.

In the past year, prices have been unchanged in England, but have fallen by 15.2% in Northern Ireland, by 1.4% in Wales and by 1.2% in Scotland.

The biggest increase during that time has been in London, with prices up by 3.6%.

Interest 'flat'

The Royal Institution of Chartered Surveyors (Rics) survey covered 257 members who work as estate agents in England and Wales.

Continue reading the main story

Uncertainty over the economic outlook remains as important as the availability of mortgage finance in depressing demand”

End Quote Ian Perry Rics It found that there had been a slight fall in enquiries in May from potential new buyers, but a rise in the number of houses being put up for sale.

As a result, sales per estate agent fell to their lowest level of the year so far, at just under 15 in the previous three months.

Prices continued to drop as well.

The survey found that 28% more of the estate agents had seen prices fall than rise in the previous three months, though the falls were generally small, at less than 2%.

"Buyer interest in purchasing property remains flat across much of the country and there is little sign of this changing any time soon," said Rics housing spokesman Ian Perry.

"Uncertainty over the economic outlook remains as important as the availability of mortgage finance in depressing demand."

'Muted summer'

According to the CML, the number of new mortgages agreed with home buyers has now risen for four months in a row.

New loans to home buyers rose by 8% in April to 40,900, although this was still 2% lower than in April last year.

The CML said recent Bank of England figures on mortgage approvals suggested new lending would not increase any more in the coming months.

Michael Coogan, the CML's director general, said: "The market continues on a stable footing and the increase in house purchase lending is a good sign that the stability will continue throughout 2011."

"However, the economic outlook, coupled with Bank of England subdued approvals data for April, suggests a muted summer for mortgage completions so we do not expect further increases in lending over the coming months," he added.

There was slight easing in the financial burden on first-time buyers.

In April they had to put down a typical deposit of 20% of their property's value, compared with 21% in both March this year and April last year.

"[The] CML's latest figures cannot paper over the fact that the mortgage market remains stagnant, and it is first-time buyers who are worst affected," said Jonathan Moore, of flatsharing website easyroommate.

"Despite the miniscule increase in the average loan-to-value, would-be buyers are being forced to stump up an average deposit of nearly ?26,000 at a time when living costs are spiralling and rents are at a record high," he added.

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Carmakers hit in new market slide

2 June 2011 Last updated at 13:06 GMT Continue reading the main story Shares in European carmakers have been hit in a renewed stock market sell-off.

Peugeot suffered most, almost 5% lower in Thursday afternoon trading, while Renault was 2.1% down and Daimler 1.6%.

It comes after new data showed car sales had continued to drop in France and Spain in May, following the expiry of government subsidies for sales, while US car sales also lagged.

Markets remain concerned about the strength of the global recovery after weak manufacturing data from the US.

European markets were down about 1% after Asian shares ended the day lower, with Japan's benchmark Nikkei 225 index down 1.7%.

On Wednesday, a survey indicated that growth in US manufacturing in May slowed to its lowest rate since 2009, while separate data showed that private employers in the US hired fewer workers in May than had been expected.

Tough times

Meanwhile, US car sales in May were at their lowest seasonally adjusted rate in eight months, and well below expectations - though some of the shortfall may be due to supply problems related to the Japanese earthquake.

The poor data sent shares in General Motors and Ford about 5% lower on Wednesday.

On the other side of the Atlantic, car sales in France were down 8.3% in May from a year earlier on a seasonally adjusted basis, following a drop registered in April.

A French sales incentives scheme ended in December, although sales that benefited from the subsidy continued to be registered until March.

In Spain, sales data registered a 23% drop versus a year earlier - the 11th drop in a row. However, sales in Italy registered a rebound.

Japan's car sector also reported bad news, as data showed that sales of Japanese cars in the US dipped in May.

Sales at the world's biggest carmaker Toyota were down by 33%. Honda Motors reported a 23% dip in sales, while Nissan Motors witnessed a 9% drop.

It is unclear how much of the sales fall was due to disruption to the carmakers' supply chains caused by the 11 March earthquake and tsunami.

However, shares in car manufacturers fell on the Tokyo Stock Exchange, with Toyota down 3.3%, Honda 2.4% lower and Nissan down 3.2% at the close of trade.

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Housing market 'still lacklustre'

27 May 2011 Last updated at 06:00 GMT There are few signs of a pick-up in prices or sales The UK housing market is still subdued, according to the latest monthly survey from the Nationwide building society.

It says prices rose by just 0.3% in May, which still left them 1.2% lower than a year ago at an average of ?167,208.

In the past six months prices have drifted up, by 0.6%.

But the lender's chief economist, Robert Gardner, said prices and sales reflected the lacklustre state of the economy.

"The UK economy returned to growth in the first three months of 2011, albeit at a modest pace," he said.

"Nevertheless, the modest improvement in economic conditions has so far been insufficient to pull the housing market out of its torpor, as the headwinds facing households remain strong."

Earlier this week, figures from HM Revenue & Customs (HMRC) showed that sales have been stagnating.

Only 66,000 homes were sold in April, which was 1,000 fewer than in March and also 6,000 fewer than in April last year.

Borrowers wary

The latest data from the Nationwide is similar to that from other market sources.

Continue reading the main story

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Recent figures from the Council of Mortgage Lenders (CML) and the Bank of England on, respectively, total mortgage lending and mortgage approvals, showed no improvement from the current historically low levels of activity.

One factor weighing on the market has been the continued rationing of mortgage funds by lenders.

This has been allied to an increasing wariness by would-be borrowers because of the subdued state of the economy and fears of higher unemployment.

But property commentator Henry Pryor said the inflated expectations of sellers and estate agents were also having an effect.

"Sellers are still asking too much with average asking prices now a whopping ?239,000, according to the website Rightmove," he said.

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