Today’s news in brief-15/1/25
Inflation in the UK unexpectedly fell to 2.5% in December, marking its first decline in three months, according to the ONS. The decrease, attributed to reduced hotel and tobacco prices despite rising fuel costs, exceeded expectations, as analysts had predicted inflation would remain steady at 2.6%. While inflation remains above the Bank of England’s 2% target, the lower rate has eased some of the pressure on Chancellor Rachel Reeves amidst criticism over a weaker pound and elevated borrowing costs. The decline has also fueled speculation of a 0.25% interest rate cut in February, although the ONS warned that slower inflation doesn’t imply falling prices, only a reduced rate of increase.
Retailers face mounting challenges as the British Retail Consortium (BRC) highlights the impact of rising costs, including an upcoming increase in National Insurance Contributions. A survey of CFOs at 52 major retailers revealed widespread concern, with 67% planning to raise prices and many reducing staffing or delaying investments. Retail CEOs had previously warned the government about the economic strain of policy changes, which could add £7bn to the sector’s costs in 2025. Weak consumer confidence and demand compound these issues, with food inflation expected to rise sharply to 4.2% in the latter half of the year.
Currys has raised its profit outlook following strong peak trading. The retailer expects profit-before-tax to hit £145-155m for the year, significantly above market estimates. Sales in the UK and Ireland grew 2% like-for-like over the holiday period, with notable increases in mobile, gaming, and premium computing categories. Omnichannel sales were a highlight, with online-in-store sales up 24%. Currys also achieved revenue growth in the Nordics, where it improved margins and reduced costs.
Victorian Plumbing reported revenues of £295.7m for FY24, up 4%, though like-for-like sales dipped 1% following its acquisition of Victoria Plum. The acquisition contributed £14.7m in revenue but incurred a £2.2m EBITDA loss. Despite this, profitability improved due to a favorable product mix, reduced shipping costs, and currency benefits. The company completed a major transition to a new 544,000 sq ft distribution center, which is expected to support future growth.
The Entertainer has appointed Mark Robinson, a seasoned supply chain expert, as its new COO, effective March. Robinson, formerly of Wincanton TechCo and John Lewis Partnership, will oversee supply chain, IT, and transformation. He succeeds Jeremy Cobbold, who will leave in the summer after five years of significant contributions, including guiding the company through the pandemic. CEO Andrew Murphy praised Robinson’s expertise and emphasised the firm’s commitment to growth.
Asos announced plans to close its US distribution centre in Atlanta, shifting operations to its automated UK facility in Barnsley and a smaller US site by FY25. The move is aimed at improving profitability, with anticipated savings of £10-20m annually from FY26. The closure will result in some staff redeployments and job losses, but the company remains optimistic about its US growth potential. Asos will introduce Partner Fulfils in the US to expand its product range and enhance customer offerings. Despite current challenges, Asos views the US as a core market and aims to achieve sustainable growth and higher margins in the medium term.
