Today’s news in brief-17/1/24
In a surprising turn of events, inflation in December exceeded economists’ predictions, rising to 4%, contrary to the forecasted decrease to 3.8%. The Office for National Statistics (ONS) reported that the upswing was driven by increases in fuel and tobacco prices. Notably, alcohol and tobacco division prices surged by 12.8%, primarily due to a substantial hike in tobacco duty announced in the government’s autumn statement. ONS Chief Economist Grant Fitzner explained that while tobacco prices played a significant role, falling food inflation helped offset the overall impact.
Superdry has reportedly engaged PwC to explore debt options following a pre-Christmas profit warning. The fashion retailer faced a YoY sales decrease of 13.1% in H1 2024, attributed to an unusually mild autumn and a strategic exit from its US wholesale operation. Despite implementing measures to bolster the balance sheet, including ยฃ25 million in funding from Hilco Capital Limited, Superdry anticipates a challenging year and potential consideration of privatisation. Founder Julian Dunkerton, holding a quarter of the company’s shares, is rumoured to be exploring privatisation, although Superdry has refrained from commenting on the speculation.
Mulberry reported an 8.4% decline in group revenue for the 13 weeks ending December 30, 2023, attributing it to a challenging macroeconomic environment and reduced luxury consumer spending. The company maintained a full-price sales strategy, leading to a 1.5% drop in overall retail sales but a 0.6% increase on a constant currency basis. While UK retail sales fell by 4%, international sales rose by 3.9% and 10.8% on a constant currency basis.
Contrary to expectations, footfall in the retail sector increased by 3.3% in 2023 despite the prevailing cost-of-living crisis. MRI Software’s retail outlook report highlighted consumers’ ability to spread costs, reinforcing the resilience of the retail sector against adverse weather, rail strikes, and economic challenges. The report also noted a continued trend of hybrid working, with 60% of consumers working from home at least part of the week. While optimism exists due to falling inflation rates, shoppers still face personal finance constraints, leading to increased preference for cheaper brands.
Uniqlo has initiated legal action against Shein, accusing the fast-fashion brand of copying its popular “Mary Poppins” shoulder bags. Uniqlo’s owner, Fast Retailing, filed a petition in the Tokyo District Court, claiming that Shein’s product closely resembles its own and undermines customer confidence in Uniqlo’s brand. The lawsuit demands Shein cease selling the imitated bags and seeks compensation for damages. Uniqlo’s “Mary Poppins” bags gained popularity on TikTok, with the lawsuit reflecting the brand’s commitment to protecting its reputation. Shein is yet to respond to the allegations.
