Closing summary
Our main stories today:
The boss of John Lewis pledged the group would always remain employee-owned “no ifs no buts” after staff members backed her to continue as chair but expressed their dismay at the retailer’s poor performance last year.
Sharon White had faced controversy after reports she was considering selling a stake in the company to an outside investor in an attempt to raise £2bn. On Wednesday, her leadership was tested in a confidence vote at a twice-yearly meeting of the retailer’s 60-strong council, which is elected by employees to represent them.
Announcing the result of votes on past performance and White’s ongoing mandate, Chris Earnshaw, president of the partnership council, said: “The council voted in support of the chairman to progress the partnership in relation to its purpose, principles and rules. The council did not support last year’s performance, in which we reported a full-year loss and no partner bonus.”
The department store and Waitrose supermarket owner reported hefty losses for 2022, which meant staff did not receive an annual bonus.
The price of goods and services in the US remained stubbornly high in April, rising 4.9.% from a year ago, the labor department reported on Wednesday.
The annual rate of inflation has fallen sharply since hitting a 40-year high of 9.1% last June. April’s rise nearly matched the 5% rise recorded in March. It was the 10th consecutive month that the rate had declined but prices are still rising at a rate that is more than twice the Federal Reserve’s target rate of 2% a year.
The latest consumer price index (CPI) – a widely followed measure of the costs for goods and services in the US economy – showed prices rising 0.4% over the month, up from a 0.1% increase in March.
Longer lorries are to be fully permitted on Great Britain’s roads after the government said it would introduce laws to allow their use, despite warnings that the move will increase the number of fatal road accidents.
The Department for Transport (DfT) said lorries measuring up to 18.55 metres long – 2.05 metres longer than the current standard size – would be allowed from the end of this month.
Asos has dived £291m into the red after sales slumped in what the online fashion retailer called a “challenging trading backdrop”, with shoppers returning to physical high street stores and cutting spending on non-essentials.
Sales fell by 8%, including a 10% drop in the UK, in the six months to 28 February – far worse than the 3% forecast by the City. The company said it had deliberately shifted away from unprofitable sales and suffered from weak consumer demand and the December postal strikes.
Thank you for reading. We’ll be back tomorrow. Bye! – JK
Here is our full story on John Lewis:
John Lewis staff back boss in confidence vote but criticise retail performance
The boss of John Lewis pledged the group would always remain employee-owned “no ifs no buts” after staff members backed her to continue as chairman but expressed their dismay at the retailer’s poor performance last year.
Chairman Sharon White had faced controversy after reports she was considering selling a stake in the company to an outside investor in a bid to raise £2bn. On Wednesday, her leadership was tested at a twice yearly meeting of the retailer’s 60-strong council, which is elected by employees to represent them.
Announcing the result of votes on past performance White’s ongoing mandate, Chris Earnshaw, president of the partnership council, said
The Council voted in support of the Chairman to progress the Partnership in relation to its purpose, principles and rules. The Council did not support last year’s performance, in which we reported a full year loss and no Partner Bonus.
The department store and Waitrose supermarket owner reported hefty losses for 2022, which meant staff did not receive an annual bonus.
Updated
John Lewis chair Sharon White's address to Partnership Council here. https://t.co/FSxeBPWUCp
— George MacDonald (@GeorgeMacD) May 10, 2023
The John Lewis Partnership’s council is meeting today where its chairman Sharon White faces a confidence vote.
The Sun’s business editor Ashley Armstrong tweeted:
Sharon White kicked off John Lewis's partnership council meeting today quoting Vivien Greene:
— Ashley Armstrong (@AArmstrong_says) May 10, 2023
"Life isn't about waiting for the storm to pass, it's about learning to dance in the rain".
And let's face it - there's been plenty of thunderstorms so far...
Retail analyst Maureen Hinton tweeted:
Noticed that the John Lewis Partnership corporate website now refers to the mutual partnership as an “experiment”. A term that supports changes it implies.
— Maureen Hinton (@maureen_retail) May 10, 2023
The investor Jeroen Blokland noted that US inflation has dropped below 5% for the first time in two years.
BREAKING!
— jeroen blokland (@jsblokland) May 10, 2023
- US Headline #inflation fell to 4.9% in April, below expectations.
First time below 5% in two years.
- Core #CPI dropped to 5.5%, matching expectations.
- This does not mean the #FederalReserve will cut rates in September! pic.twitter.com/WdOTk4tvMo
The Washington Post’s economic columnist and editorial board member Heather Long tweeted:
Fascinating: Inflation for "all items" was 4.9% (y/y) in April.
— Heather Long (@byHeatherLong) May 10, 2023
The Fed prefers to look at Inflation "minus food and energy," which is now HIGHER = 5.5% (y/y)
What does this tell us? Services inflation is increasingly the problem now. pic.twitter.com/59ZizY0R4J
BREAKING: Underlying US inflation moderated slightly in April, potentially giving the Fed room to pause rate hikes soon https://t.co/SJmQl9J6Wn pic.twitter.com/etIzC5vosb
— Bloomberg Markets (@markets) May 10, 2023
Updated
Neil Shah, executive director at Edison Group, said the US economic picture remains complex.
These CPI [consumer price index] figures will be of little help to forecasters. US April inflation figures remained stubbornly high at 4.9%, though very slightly lower than expected. Core CPI, the Fed’s main guideline for monetary policy, has also come down slightly year-on-year, though sticky services inflation will remain a concern.
And then there’s the backdrop. While the US housing market has seen a significant decline in the first quarter, the US labour market is going from strength to strength, adding a further 253,000 jobs in April. This also marked the 13th straight month where US job creation has surpassed the median forecasts of economists. Finally, let’s not forget the small issue of the small banks crisis which has tightened lending conditions and could provide a significant dampener for inflation in months to come.
All of these variables are complicating the Fed’s path forward, as its tightening cycle is yet to show its full effect. The next set of inflation figures will be significant – they are set to be released the day before the next Fed decision. Until then, the mood remains uncertain.
The annual rate of US inflation has fallen sharply since hitting a 40-year high of 9.1% last June but prices are still rising at a rate that is more than twice the Federal Reserve’s target rate of 2% a year.
April’s rate fell unexpectedly to 4.9%, but nearly matched the 5% rise recorded in March.
Updated
US inflation eases to 4.9%
US headline inflation has come in slightly better than expected, ticking down to an annual rate of 4.9% in April from 5% in March.
The core rate, which excludes volatile items like food and fuel, eased to 5.5% from 5.6%, as expected.
US inflation figures are out in just a couple of minutes.
We are expecting the headline rate to have stayed at 5% while the core rate, which excludes volatile items like food and fuel, is forecast to have eased slightly to 5.5% from 5.6%.
We will also get the results of the John Lewis confidence vote. Stay tuned….
Updated
While spring is on the way… households and businesses in Great Britain saved enough electricity over the winter to power 10m homes by reducing their energy use during peak demand hours in order to help the country avoid blackouts.
About 1.6m households and businesses received payments to help reduce the pressure on the National Grid during the winter months as part of a demand flexibility scheme run by its electricity system operator (ESO).
The energy users were called on about 22 times to reschedule their energy use to avoid peak demand hours, for example, running dishwashers or tumble dryers at night, which saved more than 3,300 megawatt-hours of electricity.
And here’s our full story on longer lorries:
Uber users in UK will be able to book flights on app by summer
Uber customers in the UK will soon be able to reserve flights through the ride-booking app, as the company aims to offer multiple forms of transport.
The new feature allowing consumers to book domestic and international flights is being rolled out on Uber’s UK app and will be available to all British users by the summer.
Uber said the flight-booking function was part of its ambition to “create a seamless door-to-door travel solution” alongside the car ride-sharing function it was first known for. The company has partnered with online travel agent Hopper to let users book flights, and will receive a small commission from each sale.
Asos falls £291m into the red
Here’s our full story on Asos.
Asos has dived £291m into the red after sales slumped in what the online fashion retailer called a “challenging trading backdrop”, with shoppers returning to physical high street stores and cutting spending on non-essentials.
Sales fell by 8%, including a 10% drop in the UK, in the six months to 28 February – far worse than the 3% forecast by the City. The company said it had deliberately shifted away from unprofitable sales and suffered from weak consumer demand and the December postal strikes.
The £291m pre-tax loss, against a £16m loss a year before, came after writing down £100m on unwanted stock as Asos focuses on a narrow range of products and tries to update its fashions more quickly.
Asos said sales had continued to slide in March and April and it now expected them to fall by at least 10% for the year and to make an underlying profit of no more than £60m.
Andrew Wade, a retail analyst at Jefferies, said Asos now appeared likely to make a pre-tax loss of about £70m for the year to the end of August, well short of the £19m profit anticipated by the City.
“Asos continues to face into significant challenges, with revenue declining more rapidly and net debt higher than anticipated,” Wade said in a note.
Tesco, Aldi and Lidl cut bread and butter prices, following Sainsbury's
Tesco, Aldi and Lidl have followed Sainsbury’s in cutting their bread and butter prices.
Yesterday, Sainsbury’s cut the price of its salted and unsalted butter from £1.99 to £1.89 for 250g packets. The UK’s second-largest supermarket chain also lowered the price of its soft white medium, wholemeal medium, wholemeal thick, and toastie white loaves of bread to 75p – a reduction of 11%.
Tesco, Aldi and Lidl followed suit today, also reducing 250g of butter from £1.99 to £1.89.
Tesco, the UK’s biggest supermarket group, has dropped the price of its most popular bread, Tesco Toastie white bread, from 85p to 75p. It has cut 10p from the price of its own-brand white, wholemeal medium and wholemeal thick 800g bread, to 75p.
Aldi reduced the price of some loaves to 75p fro 79p. Lidl cut some bread prices to 75p and said it had a loaf priced at 39p.
It shows price wars are still underway – last month, Tesco led on milk price reduction, followed by Sainsbury’s. They cut the price of milk by at least 5p, followed by Aldi, Lidl and Asda.
Supermarkets have been criticised for not passing on lower food prices. Wholesale prices for commodities such as wheat and butter have been falling around the world after sharp rises last year, but UK food inflation is still at its highest level for 45 years, pushing up wider inflation.
Tesco’s chief product officer Ashwin Prasad said:
As families continue to watch their weekly spend and budget carefully, we’re pleased to be able to pass on price reductions where we can, and to help with everyday essentials like bread and butter.
The grocer said prices could vary in its Express stores.
Updated
‘They were little’: photos show children illegally working in US slaughterhouse
In the US, harrowing photos released by the US labor department taken at a slaughterhouse plant in Nebraska show the conditions more than 100 children faced while illegally working for Packers Sanitation Services Incorporated (PSSI) before the department cracked down on the company for violating child labor laws.
The pictures show employees covered in protective gear, using chemicals to spray down and sanitize equipment. In some of the pictures, made public on Sunday by the television news show 60 Minutes, some of the employees appear to be young children, wearing protective face glasses and holding buckets.
In February, the labor department fined PSSI $1.5m for employing at least 102 children ages 13 to 17 across 13 meat-packing plants in eight states. The fine amounts to $15,138 for each child, the maximum penalty under federal law. The Wisconsin-based company is one of the largest food sanitation companies in the US and is contracted by meat plants to sanitize facilities. The company says it works with more than 725 partner plants.
Here’s our full story on Wetherspoons:
The pub chain JD Wetherspoon has reported its highest Easter week sales and busiest-ever Saturday, with cash-conscious drinkers searching out cheaper options amid the cost of living crisis.
Wetherspoon’s, which runs more than 830 branches across the UK and Ireland, said it had benefited from a rise in sales in the past two weeks, both of which included bank holiday weekends.
Cyber attack to cost Capita up to £20m
The outsourcing firm and government contractor Capita has revealed it will take a hit of up to £20m from a recent cyber-attack in which some customer, supplier and staff data was accessed by hackers.
The group, which is a major contractor for local authorities, said investigations into the incident suggest that some data was accessed but that this was from less than 0.1% of its server estate.
It said it has taken “extensive steps” to recover and secure the data contained within the affected server estate, and to “remediate any issues arising from the incident”.
It expects the bill for the cyber-attack to reach between £15m and £20m, covering specialist professional fees, recovery and remediation costs, as well as investment to reinforce its cybersecurity defences and strengthen its IT security.
More talks as US economy inches toward default
President Joe Biden and top lawmakers agreed on Tuesday to further talks aimed at breaking a deadlock over raising the $31.4tn US debt limit, with just three weeks before the country could be forced into an unprecedented default.
After about an hour of talks in the Oval Office, Biden, a Democrat, and House of Representatives speaker Kevin McCarthy, a Republican, deputized their aides to hold daily discussions about areas of possible agreement as a default looms as soon as 1 June.
Biden, McCarthy and three other top congressional leaders are set to meet again on Friday.
Biden called the talks “productive” and appeared to offer Republicans some possible compromises, including taking a “hard look” for the first time at clawing back unspent coronavirus relief funds to reduce government spending.
But he repeated that Republicans must take the threat of default off the table. And he did not rule out eventually invoking the 14th amendment to the US constitution, an untested approach that would seek to declare the debt limit unconstitutional. Doing so would require litigation, he said, but is an option he may study in the future.
“There’s a lot of politics and posturing, and that’s going to continue for a while,” Biden said, but political leaders are “getting to work”.
“Everyone in the meeting understood the risk of default,” Biden said.
The boss of John Lewis will face a confidence vote by staff members today as the business considers potentially bringing in outside investment – a change that could threaten the decades-old employee-owned model, writes our retail correspondent Sarah Butler.
Chairman Sharon White is considering radical ways to bring in up to £2bn to help secure the future of the John Lewis Partnership, including diversifying into building flats for rent above shops, after reporting hefty losses from its chain of department stores and Waitrose supermarkets.
The former top civil servant, who left the public sector to join the retailer three years ago, will give an update to the 61 members of the John Lewis Partnership council. A governing body made up of shop floor staff elected by the company’s workers, the council is gathering for a two-day meeting at the retailer’s own Odney Club holiday retreat in Berkshire.
The meeting, called a holding to account session, takes place shortly after each of the two half-yearly financial reports and is part of the group’s constitution.
The debate is followed by two votes – one on whether the council has confidence in the progress of the partnership under the chairman’s leadership over the past year, and the other on whether it can support the chairman to take the business forward. Members can answer from strongly agree to strongly disagree.
The votes are symbolic rather than binding; however, they can be influential as the business is owned by its staff and the council has the power to oust the chairman at any time if members see fit.
Industry experts are warning that the lorries, as long as bowling lanes, could pose a hazard on smart motorway lay-bys, where they would take up a fifth of the lay-by, the Daily Mail reports.
David Churchill, chief political correspondent at the Daily Mail, tweeted:
New super-lorries are to be permitted on Britain’s road network - with industry experts warning they may be so long they present a hazard on smart motorway lay-bys:https://t.co/5YgTgCMZ7m
— David Churchill (@David_Churchill) May 10, 2023
New comparative unit alert: no longer are things as big as swimming pools, double-decker buses or Wales, they're now the size of a bowling lane. Sub-editors please take note. @angrypiln https://t.co/qJilPMl5vz
— Peter Bowyer (@bowyerp) May 10, 2023
The government said more than 300 companies in the UK took part in the long lorry trial and almost 3,000 vehicles are already on the road.
Businesses that will be rolling out the use of longer semi-trailers (as long lorries are officially known) include Greggs, Morrisons, Stobart, Royal Mail and Argos.
Gavin Kirk, supply chain director at Greggs, said:
We welcome the introduction of LSTs into general use. Since 2013, Greggs has been operating LSTs from our National Distribution Centre in Newcastle. We were early adopters of the trial as we saw significant efficiency benefits from the additional 15% capacity that they afforded us.
We have converted 20% of our trailer fleet to LSTs, which was the maximum allowable under the trial, and these complement our fleet of double-deck trailers. Our drivers undertook additional training to use these trailers and we have monitored accidents, finding that they are as safe as our standard fleet.
Due to the increased capacity, we have reduced our annual kilometer travel by 540,000 km, and saved 410 tonnes of carbon per year from LSTs. This supports our wider ESG agenda, the Greggs Pledge.
The Department for Transport said vehicles which use LSTs will be subject to the same 44 tonne weight limit as those using standard trailers. They are also expected to cause less wear on the roads than conventional lorries due to the type of steering axle used.
Updated
However, road safety campaigners are not convinced that longer lorries are safe(r).
The Campaign for Better Transport tweeted:
We did a lot of work exposing the dangers and misinformation around longer lorries, so we’re disappointed @transportgovuk is taking this retrograde step. https://t.co/WVGXcDhTHP
— Campaign for Better Transport (@CBTransport) May 10, 2023
The blogger Miles King tweeted:
The Lorry size ratchet continues. Now that longer lorries will be rolled out, it's only a matter of time before the industry demands they carry heavier loads. Leading to yet more damage to roads, verges, bridges, houses. https://t.co/zvYUM1kYEq
— Miles King (@MilesKing10) May 10, 2023
Longer lorries bring wider blind spots (and big fears for cyclists)https://t.co/Komf6V496g
— The Independent (@Independent) May 10, 2023
Updated
Legislation on longer lorries to go before parliament today
Back to our main story, long lorries. The government said legislation will go before parliament today to “safely roll out” the vehicles on roads from 31 May.
These new lorries will move the same volume of goods, but will use 8% fewer journeys than current trailers, the Department for Transport said. This will generate an expected £1.4bn in economic benefits and take one standard-size trailer off the road for every 12 trips.
Lorries with longer trailers will also save 70,000 tonnes of carbon dioxide from being released into the atmosphere, ministers estimate.
The move follows an 11-year trial to ensure the longer lorries are used safely on roads, and operators will be encouraged to put extra safety checks and training in place. The trial demonstrated that they were involved in around 61% fewer personal injury collisions than conventional lorries, the DfT said.
However, road safety campaigners are dismayed by the move.
Roads minister Richard Holden said:
Everyone around the country depends on our haulage sector for their everyday needs – from loo rolls to sausage rolls – and a strong, resilient supply chain is key to the government’s priority to grow the economy.
These new longer lorries will make a big difference for British businesses like Greggs, who will see 15% more baked goods delivered, from tasty pastries to the nation’s much-loved sausage rolls.
It’s fantastic to see this change for our supply chain come into law, resulting in a near £1.4bn boost to the haulage industry and driving economic growth. Let the good times roll as we reduce congestion, lower emissions and enhance the safety of British roads.
Updated
European stock markets have opened cautiously higher but are little changed, with the FTSE 100 index in London up nearly 6 points at 7,770.
National Express to rename itself Mobico Group
National Express will change its name to Mobico Group from early June.
Its board believes that the name better reflects the company’s international nature and its diverse range of services.
However, its operating subsidies will retain their current names and National Express will still be used for the UK’s national coach network and certain other businesses.
Other businesses that have renamed itself include the insurance and pensions group Standard Life Aberdeen as abrdn, which provoked ridicule.
Wetherspoon sees record sales; coronation weekend slightly less busy
The pub chain J D Wetherspoon has reported seeing its highest-ever Easter week sales and busiest-ever Saturday in recent weeks, as cash-conscious customers search out cheaper options amid the cost of living crisis.
The group said it is expecting to reach record sales in the current financial year, following recent strong trading.
Wetherspoon’s which runs just over 830 across the UK and Ireland, said it had benefitted from a surge in sales in the past two weeks, which have both included bank holiday weekends.
It described the first weekend, which included the bank holiday on 1 May, as being “exceptionally strong” for trading, where it reported its “busiest-ever Saturday”.
However, Wetherspoon’s said the coronation weekend was slightly less busy in its pubs, and reported last Saturday as being “noticeably quiet”. The company suggested that many customers had probably bought alcohol at supermarkets to consume while watching the ceremony at home, rather than in hospitality venues such as pubs and restaurants.
Tui expects strong summer; bookings and prices up
The travel group Tui is expecting a “strong summer” as bookings have picked up and it has raised its prices. The most popular destinations include Spain, Greece and Turkey.
The company, which owns hotels, planes and cruise ships, said winter travel had met its expectations, while summer bookings are 13% higher than last year and have almost caught up with pre-pandemic levels (at 96% of summer 2019).
Average prices are “significantly higher”. They have increased by 5% since last year but on a like-for-like basis, prices are 8% higher, excluding rebookings from previous seasons. Compared to the summer of 2019, average prices are 26% higher.
In the UK, nearly two-thirds of holidays have been sold for the summer. Bookings are similar to the previous summer but are 10% above pre-pandemic levels.
Tui has repaid the German state aid it received after the Covid outbreak. It made revenues of €3.2bn in the second quarter, up from €2.1bn a year earlier. Its quarterly loss shrank by €88m to €242m in underlying earnings.
Updated
Introduction: Asos swings to first-half loss; longer lorries to be allowed on UK roads
The online fashion retailer Asos has swung to a first-half loss amid a drop in sales, but said it was confident it would return to a profit in the second half.
Sales fell 7% year-on-year in the six months to 28 February as the shift to online shopping partially reversed, although Asos said it remained “notably higher” than before the Covid pandemic. UK sales were down 10% while Europe was flat, the US posted a 7% drop and the rest of the world was down 12%.
Asos also scaled back its ranges to “right-size stock,” after a massive £100m stock writeoff last October. The company, which announced a major restructuring then, made an adjusted pretax profit loss of £87.4m against a profit of £14.8m a year earlier.
The UK government is to approve the use of longer lorries despite warnings that this will increase the number of fatal road accidents.
The Department for Transport announced that lorries up to 18.55m long, which is 2.05m longer than standard size, will be permitted from the end of the month under legislation going before parliament today.
Ministers argue that longer lorries will increase efficiency and cut emissions.
Longer lorries can carry more in fewer trips but have a larger tail swing and extended blind spots, and road safety groups have warned of the dangers for pedestrians and cyclists and potential damage to roadside infrastructure.
Longer lorries have been trialled since 2011 and around 3,000 are already on the roads. From 31 May any business in England, Scotland and Wales will be allowed to use them.
In Germany, inflation eased to an annual rate of 7.2% last month from 7.4% in March, according to Destatis, the statistics office.
Ruth Brand, the Destatis president, said inflation had weakened for a second successive month but remained at an elevated level.
Food continued to be the main driver, up 17.2% year-on-year while energy prices climbed 6.8%. Dairy products, bread, fish, sugar, jam and honey posted the biggest increases.
The main event in financial markets today is the US inflation numbers for April.
Michael Hewson, chief market analyst at CMC Markets UK, says:
With the Federal Reserve having raised rates again last week by 25bps today’s April CPI numbers are the next key benchmark feeding into whether the next meeting will see the Federal Reserve hit the pause button and keep rates unchanged after several meetings of consecutive hikes.
While headline CPI fell to 5% in March from 6% in February, the picture for core prices did little to offer encouragement that inflation would continue to fall sharply, and it is in this area which the Fed is keen for markets to focus their attention on.
On the core measure in March, prices rose on an annual basis to 5.6% from 5.5%, putting core inflation above headline inflation for the first time since January 2021.
It is this stickiness in core prices as well as the resilience in the US jobs market that is making the Fed’s job so difficult, even allowing for the fact we’ve seen the US central bank hike rates at every meeting over the last 12 months.
Also today, the boss of John Lewis will face a confidence vote by staff members as the partnership considers the option of bringing in outside investment in a change that could threaten the decades-old employee-owned model.
Chairman Sharon White is considering radical ways to bring in up to £2bn to help secure the future of the group, including diversifying into building flats for rent above shops, after reporting hefty losses from its chain of department stores and Waitrose supermarkets.
The Agenda
9am BST: Italy Industrial production for March
1.30pm BST: US Inflation for April (forecast: 5%, previous: 5%)
