Fashion brand Quiz will need more funding by early 2025
A late newsflash: UK fashion brand Quiz has just warned shareholders that it will need extra funding by early next year, after a disappointing Christmas.
Quiz has told the City that it made a loss of £4.7m in the six months to 30 September, compared with a loss of £1.5m a year earlier.
Since then, it admits, it suffered a “marked decline in traffic both online and in-store” in November.
And in December, while online revenues have been broadly stable year-on-year, they have fallen again in physical stores.
As of yesterday, Quiz says, it had net borrowings of £3.5m, giving it £500,000 of headroom within its £4.0m of bank facilities.
It warns:
Given the disappointing level of revenues in the important Christmas trading period, as announced on 6 December 2024, the cash headroom available to the business is less than previously anticipated.
As a result, the Board anticipates that additional funding will be required by the Group in early 2025.
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Closing post
Time to wrap up…
After a weak Boxing Day, UK, shoppers are returning to the high street today in greater numbers than last year.
New data from MRI Software shows that footfall across all UK retail destinations had risen by +8% as of 12pm, compared to 27th December 2023.
That might help the sector, where the number of UK retailers on the brink of collapse has risen by a quarter in the final three months of the year, driven by a combination of rising business costs and weak consumer confidence, according to a report.
The proportion of retail businesses classed as being in “critical” financial distress increased by 25% to 2,124 in the fourth quarter compared with the previous three months, the insolvency specialists Begbies Traynor said.
The general retail sector is under most pressure, with a 29% quarterly increase in businesses in critical financial distress, rising to 1,457 from 1,127 in the third quarter.
Stocks on Wall Street have fallen in morning trading in New York…
…while a rally in Japan pushed the Nikkei to a five-month closing high….
…and South Korea’s won has dropped to a 16-year low after lawmakers voted to impeach the country’s acting president.
Thousands of Land Registry workers have voted to strike in a dispute over office working.
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Katie Wyle, head of shopping centre management UK at Unibail-Rodamco-Westfield, reports that shopper numbers at their two sites in London have been similar to last year, saying:
“This year Boxing Day attracted over 320,000 shoppers to Westfield London and Stratford City which is on par with 2024 and takes our total number of visitors since festivities began to over 10m.
We’re seeing lots of people coming with friends and family to dine out and enjoy leisure activities like karting at Gravity, ice skating and bowling, as well as bagging some bargains in the sales.”
The selloff in New York is gathering pace, with the Nasdaq Composite now down 1.25% at 19,771 points.
Wall Street opens in the red
There’s no sign of a festive Santa Rally on Wall Street, where the US stock market has fallen at the start of trading.
The Dow Jones Industrial Average dropped by 270 points, or 0.6%, to 43,055 at the open.
The broader S&P 500 index, and the tech-focused Nasdaq, have both also fallen by 0.6%.
Land Registry workers vote for strike action over work-from-office demands
Thousands of staff at the Land Registry have voted for strike action after being ordered back to the office for three days a week.
The Public and Commercial Services (PCS) union says 3,800 workers based in 14 offices across England and Wales have voted to strike, and are also concerned about the employer inappropriately using personal data and having to accept extra responsibilities without extra pay.
The Land Registry is a goverment agency that handles the registration of land and property ownership in England and Wales.
PCS general secretary Fran Heathcote said:
“The government doesn’t seem to learn that applying arbitrary targets on office attendance doesn’t increase productivity and is unpopular with staff members.
“If they want a motivated, hard-working workforce, ministers should trust their own employees to have some say over their working conditions, rather than acting like Victorian bosses.
“It’s not too late for management to avoid strike action by ending this dispute.”
A Land Registry spokesperson has said the agency “will respond as needed to maintain essential services as we have done during previous periods of industrial action.”
The pound is enjoying a little post-Christmas bounce.
Sterling has gained 0.35% against the US dollar today, to $1.257, the highest since Monday.
Retail footfall up 8% this morning
After yesterday’s drop in footfall, shoppers are returning to the high street today in greater numbers than last year.
New dat from MRI Software shows that footfall across all UK retail destinations had risen by +8% as of 12pm, compared to 27th December 2023.
They report that shopper numbers on the high street is up 8.7% year-on-year, alongside a 7.3% increase in footfall at retail parks, and 7.2% at shopping centres.
This suggests that consumers are on the lookout for post-Christmas bargains, or restocking their fridges and cupboards after a flurry of festive feasting.
Shoppers are “shaking off their post-Christmas slumber”, says Jenni Matthews, marketing and insights director at MRI Software, adding:
Following a subdued start to the Boxing Day sales, this uplift is promising for for retail stores and destinations.
It’s expected that footfall will continue to rise as the day progresses and into the weekend as consumers restock on groceries, prepare for New Years celebrations, and hunt for Boxing Day bargains.
In a sign of how quiet things are in the City today, the most read article on the London Stock Exchange’s Regulatory News Service (RNS) is the test message they put out at 5am to show it was working.
Russia’s rouble has fallen sharply against the US dollar today.
The rouble is currently down 3.7% at 103.7 roubles to the dollar, having hit a two-week low of almost 107/$ earlier today.
The weakness comes after Reuters reported yesterday that Russia’s central bank would withdraw some support for the currency in the first working week of 2025 after the New Year break.
That would reverse some of the recent actions to prop up the rouble after it weakened in November, by deferring some foreign currency purchases.
The London-listed mining company Gemfields said it had temporarily halted its ruby mining operation in Mozambique after groups “took advantage” of political unrest to set fire and attempt to invade its site, resulting in two fatalities.
Gemfields, one of the world’s largest miners of coloured gemstones, said that more than 200 people associated with illegal ruby mining attempted to invade the residential village built by the company next to its Montepuez Ruby Mining (MRM) operation in northern Mozambique on Christmas Eve.
The company, which is incorporated in Guernsey and is listed on the London and Johannesburg stock exchanges, said that the groups were trying to take advantage of the widespread civil unrest after the controversial and disputed recent national election.
The oil price has risen today, amid hopes of a pick-up in demand from China.
Brent crude is up 0.8% at $73.83 per barrel, after the World Bank yesterday lifted its growth forecasts for China’s economy.
Shares in some UK retailers are lower today, as traders digest the drop in Boxing Day footfall yesterday.
Next, the high street, online and catalogue shopping firm, are down 1.4%, putting them among the FTSE 100 fallers this morning. Marks & Spencer are down 0.1%.
On the smaller FTSE 250 index, online electricals retailer AO World are the top faller, down almost 3%.
Thames Water finances on 'shaky ground' even after debt restructuring
Thames Water’s finances are on “shaky grounds” even if it secures investor and court approval to restructure its debts, analysts have warned.
The company’s woe are set against an challenging outlook for the rest of the English and Welsh water sector too, according to financial services and research firm Morningstar.
While regulator Ofwat has greenlit significant bill increases for consumers of £31 a year on average up to 2030, companies may still face an uphill climb to secure the necessary investment to meet increasingly stringent standards.
Morningstar said in a research note:
“We believe the UK water utilities will still face considerable challenges over this period given the heightened environmental concerns and large funding needs for their capital programmes.”
Water companies have two months to lodge an appeal with the UK’s Competition and Markets authority if they believe the bill increases signed off by Ofwat before Christmas are unfair.
Still, even if other companies face higher borrowing costs and greater investment demands, Thames stands out as a troubled case. It is battling to secure court approval for a £3bn credit lifeline and it has said it needs to raise an additional £3.25bn in equity funding.
“However, both funding plans remain on shaky grounds as equity investors are concerned with the viability of the utility and the investability of the industry, while a smaller group of B-class debtholders oppose the emergency cash line as it will likely wipe out their investments in a restructuring scenario,” Morningstar said.
More drama in the currency markets!
India’s currency, the rupee, hit an all-time low today before rebounding – sparking speculation that the Indian central bank was selling dollars via state-run banks to curb the weakness.
The rupee fell as low as 85.8075 to the dollar today, before a partial recovery to 85.48/$, down 0.25% today.
Reuters reports:
The Reserve Bank of India “stepped in heavily” near the 85.80 level, which helped the rupee recover, a trader at a foreign bank said.
Dollar demand related to maturing non-deliverable forwards (NDF) and currency futures weighed on the rupee on Friday while panic dollar buying from importers compounded the pressure, traders said.
⚠ INDIAN CENTRAL BANK LIKELY SELLING U.S. DOLLARS TO LIMIT RUPEE DEPRECIATION - TRADERS
— PiQ (@PiQSuite) December 27, 2024
Won hits near 16-year low amid South Korea's political crisis
The South Korean won has dropped to a near-16 year low against the US dollar today, amid a political crisis in Seoul.
The won fell by 0.6% today, extending its recent losses, to 1,475 won to the dollar, its weakest level since March 2009.
The selloff came before South Korea’s opposition-controlled National Assembly voted to impeach the country’s acting leader, Han Duck-soo.
Han had only been South Korea’s caretaker leader since President Yoon Suk Yeol was impeached by the assembly after he imposed martial law earlier this month.
South Korea’s main opposition Democratic party filed the impeachment motion after Han refused to fill three vacant seats in the Constitutional Court, which is set to adjudicate Yoon’s impeachment trial.
Shares were also hit in Seoul, pulling the Kospi 200 index down by 0.75% today.
Just in: full-day retail footfall data for Boxing Day has just been released, confirming that shopper numbers fell.
There was a -4.9% drop in footfall across all UK retail destinations compared to Boxing Day last year, MRI Software reports. That implies a late-evening surge in shoppers, as footfall up to 8pm yesterday was down by -7.6%.
German business associations see their current situation as worse than it was a year ago and remain pessimistic about the coming year, economic institute IW has reported today.
A new survey from IW found that 31 out of 49 business associations see the current situation as worse than in 2023 and 20 out of 49 industry representatives expect lower production next year, while only 16 expect an increase.
IW director Michael Huether says:
“The German economy won’t get off the ground in 2025 either.”
"Germany has faced various crises over the last 100 years, but none have been as complex or had as many causes as the one we are experiencing now," says Michael Hüther, head of the German Economic Institute (IW).
— Solix Trading (@Solix_Trade) December 27, 2024
🇩🇪 Economic sentiment has hit rock bottom, and prospects for 2025…
German firms are suffering from high for energy, labour and materials costs, IW says, while the geopolitical uncertainty is hampering exports, the institute added. The political crisis in Germany is also hurting investment, with a general election set for February.
Many European stock markets have reopened after the Christmas break, but there’s not much festive excitement this morning!
In London, the FTSE 100 index of blue-chip shares has dropped by 22 points, or 0.27%, to 8113 points. Mining company Anglo American (-1.5%) and online property portal Rightmove (-1.4%) at the top fallers.
Germany’s DAX index has dipped by 0.1%, while the wider Stoxx 600 index was flat
Japan's Nikkei hits five-month closing high over 40,000 points
In Tokyo, Japan’s Nikkei share average has hit a five-month closing high today.
The Nikkei gained 1.8% today to finish at 40,821.16, its highest close since July 17, with investors optimistic they’ll see corporate growth in the coming year.
Kentaro Hayashi, senior strategist at Daiwa Securities, says:
“The market cheered recent news of domestic firms, such as merger talks between Honda and Nissan. That drove expectations that Japanese firms will continue to improve investor returns.”
Away from the retail sector, Britain’s steel industry is calling on the government to buy more domestic produce, as it prepares for a major expansion of offshore wind generation.
Only 2% of the steel used in British offshore wind projects over the past five years was made in the UK, and the industry wants ministers to aim to dramatically increase that proportion.
The business secretary, Jonathan Reynolds, is preparing to publish a new steel strategy in the spring that will look at how to “increase steel capacity and capability in the UK” even as the industry struggles with the costs of decarbonising.
Gareth Stace, the UK Steel chief executive, said there was a “great opportunity” in offshore wind, but the industry wanted the Labour government to pledge to favour British-made steel in its procurement.
Begbies Traynor also reports that an additional 28,747 retail businesses in the UK are in ‘significant’ financial distress – less severe than ‘critical’, but still concerning.
Begbies Traynor partner Julie Palmer says:
“As we look ahead to 2025, the outlook is very mixed.
While some retail businesses are adapting to these pressures, many others remain vulnerable, especially in the face of rising wages, online competition from the likes of Temu and Shein, and fragile consumer confidence. With mounting challenges on the horizon, weaker businesses are likely to find little joy as we enter the New Year.”
More UK retailers fall into 'critical financial distress'
The number of UK retailers facing “critical” financial problems has risen by more than 25% in the last three months, new data shows.
Highlighting the pressures on the sector, after a disappointing Boxing Day, restructuring specialist Begbies Traynor has reported there were 2,124 retailers in “critical financial distress” in the first 11 weeks of the October-December quarter.
That’s a jump from 1696 in July-September, but slightly lower than the 2,142 recorded in the last quarter of 2023.
Begbies, the UK’s largest insolvency practitioner, says the quarter-on-quarter increase reflects subdued consumer confidence and rising costs.
Julie Palmer, partner at Begbies Traynor, says retailers are under ongoing pressures, including rising operational costs and squeezed consumer spending.
Palmer adds:
“Moreover, the weaker-than-expected retail sales performance in November, traditionally a critical month for the sector, further underscores the tough trading conditions, as consumers hold off on purchases amid low confidence and rising prices.
“Adding to this uncertainty, the measures announced in the Autumn Budget, including the planned increase to employers’ National Insurance Contributions, will significantly dial-up the challenges faced by these businesses. These changes, alongside increases to the Minimum Wage, will negatively impact cash flow and, consequently, we expect elevated insolvency levels across this sector during 2025.
“Even for more resilient businesses, the pressures remain relentless, and many will likely face financial challenges next year as they navigate these compounded difficulties.
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Introduction: Boxing Day footfall drops
Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.
Cost-of-living pressures have been blamed for a drop in shoppers hitting the UK high street yesterday.
The traditional Boxing Day sales seem to have been something of a flop, with a 7.6% drop in footfall compared to 26th December 2023 as of 8pm last night, according to data from MRI Software.
Jenni Matthews, marketing and insights director at MRI Software, explains:
The decline in Boxing Day activity may reflect a shift in consumer behaviour, influenced by the ongoing cost-of-living crisis.
With footfall levels +18.1% higher in all UK retail destinations on Christmas Eve this year compared to Christmas Eve last year, suggesting that many shoppers concentrated much of their spending in a pre-Christmas rush.
There are other factors. For starters, online shopping means many retailers began their Boxing Day sales late on Christmas Day (handy for those sober enough to operate a computer or mobile phone).
Shoppers had been expected to spend £3.7bn on Boxing Day, only a 1.3% increase on last year.
Secondly, many stores remained closed on Boxing Day – including John Lewis, Marks & Spencer, Next and Aldi – to give their staff more of a Christmas break.
As Kien Tan, a senior retail adviser at PwC, puts it:
“The key thing about footfall numbers is that they don’t tell the whole story.
Lots of shops are now closed on Boxing Day. It used to be just John Lewis, but now Next, M&S and most big supermarkets close.”
Thirdly, rising concerns about Christmas consumerism may have encouraged some potential shoppers to stay at home.
Yesterday’s slump in the number of people tramping around the shops could show a return to the declining levels of excitement about Boxing Day that were recorded before the Covid-19 pandemic.
As Matthews explained to PA Media:
“We’ve got to bear in mind that (last year) was our first proper Christmas without any (Covid-19) restrictions or limitations.
“Figures have come out that things have stabilised, we’re almost back to what we saw pre-pandemic.”
The agenda
4pm GMT: Russia’s retail sales and unemployment rate for November
