Next and Greggs hike forecasts after strong trading; hawkish Fed spooks markets – business live

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The B&M Home Store in Slough

Discount retailer B&M has also lifted its profits guidance, after a strong Christmas.

B&M says it benefitted from importing products from abroad early, which paid off when retail spending jumped in October and November as consumers brought forward their Christmas spending.

Simon Arora, B&M’s chief executive, said,

“The Group has delivered a very strong Golden Quarter, with our two-year like-for-like performance demonstrating strong retention of new customers.

Our decision to take receipt of imported Christmas stock early in the season meant we were able to provide customers with great products at great prices.

B&M now expects earnings this financial year to hit £605m to £625m, ahead of the current analysts’ consensus estimate of £578m.

Although B&M’s like-for-like sales in the three months to Christmas Day fell 6.2% year-on-year, they were still 14% higher than two years ago, before the pandemic.


Other European markets have also opened lower, with Germany’s DAX dropping 1% and France’s CAC losing 1.1%.


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FTSE 100 drops

In the City, the FTSE 100 has fallen by nearly 1% as investors react to the prospect of earlier US interest rate rises.

The blue-chip index has dropped by 67 points to 7450 points, after last night’s US Federal Reserve meeting minutes showed the central bank may raise interest rates sooner than expected.

Consumer credit report firm Experian (-3.5%), software developer Aveva (-3%), analytics firm Relx (-3%), and tech-focused investment trust Scottish Mortgage (-2.9%) are the top fallers, pulling the FTSE 100 away from the 22-month high touched on Wednesday.

Most stocks are lower, although banks (which benefit from higher interest rates) are bucking the selloff. Lloyds Banking Group has gained 0.6%. Mining stocks are also a little higher.

Greggs appoints Roisin Currie as CEO

Greggs has also appointed a new chief executive, to replace long-serving CEO Roger Whiteside.

Roisin Currie, Greggs’ retail and property director, will succeed Whiteside in May.

In her current role Currie runs Greggs’ retail operations, developing its shop estate and its home delivery partnership with Just Eat.

Whiteside has led Greggs since 2013, expanding its store estate, adding new ranges, and growing the share price from below £5 in 2013 to over £33 last night.

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Greggs share price over the last decade Photograph: Refinitiv

Ian Durant, Greggs chairman, says:

“Roisin has played a central role in the success of Greggs as it has developed as a multi-channel food-on-the-go business and I am delighted that she will lead the next phase of our growth as Chief Executive.

She has deep experience of our culture and our strategic plan, and will lead with energy and character. Roger Whiteside has been an outstanding Chief Executive and I wish him well for the future. Roisin and I look forward to working with Roger to ensure a smooth transition. “

6.7m mince pies help Greggs lift expectations

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A Christmas themed window display at a branch of Greggs bakery chain in London, Britain. Photograph: May James/Reuters

Bakery chain Greggs has predicted its full year trading will be “slightly ahead” of previous expectations, despite the impact of omicron on high street stores.

Greggs, which sells sausage rolls, sandwiches and cakes from over 2,000 stores, has reported a 0.8% rise in like-for-like sales for its fourth quarter compared to two years ago.

Like-for-like sales in the last quarter of 2021 were 0.8% higher than two years ago, despite the move back to home working at the end of last year.

Greggs says it saw:

a strong performance in October being followed by more challenging conditions as consumers responded to precautionary messages relating to the new coronavirus variant.

Christmas food was popular — with Greggs selling 6.7m shop-baked mince pies over the festive season.

Our range continues to evolve in line with changing consumer tastes and dietary choices so the launch of our new Vegan Festive Bake was a natural next step.

Like many food retailers, Greggs also faced staff and ingredient shortages, which drove up costs (it warned in October).

Today it says:

The fourth quarter results were achieved against a backdrop of continued disruption to staffing and supply chains.

Our teams across the business have done a magnificent job coping under difficult circumstances and in recognition of this we brought forward the planned 2022 pay awards for our operational teams by five months.

Next beats sales forecasts in strong Christmas

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A store of clothing retailer Next in London Photograph: May James/Reuters

British clothing retailer Next has lifted its full-year profit outlook again after beating its sales guidance in the crucial Christmas trading period.

Next’s full price sales in the eight weeks to Christmas Day jumped 20% compared with two years ago (before the pandemic), which is £70m ahead of its previous guidance.

Next has now lifted its full year profit before tax guidance by £22m to £822m — which would be 9.8% higher than two years ago. It now expects full price sales growth of 12.8% versus 2019/20, £70m ahead of previous guidance.

A “ strong revival” in NEXT branded adult formal and occasionwear boosted sales, it says, and helped it ride out the UK’s supply chain problems.

In the run up to Christmas our stock levels were materially lower than planned. We also experienced some degradation in delivery service levels as a result of labour shortfalls in warehousing and distribution networks.

The fact that our sales remained so robust in these circumstances is, we believe, testament to the strength of underlying consumer demand in the period.

Inroduction: Markets jolted as Fed hints at earlier rate rises

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Stock markets are taking a tumble today after America’s central bank revealed it could raise interest rates sooner or faster than expected, to tame US inflation.

The minutes of the Federal Reserve’s December meeting, released last night, shows that Fed officials were concerned about America’s “elevated levels of inflation”, and considering normalising monetary policy faster to combat rising prices.

In a hawkish turn, the Fed minutes say:

Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated.

Officials pointed to America’s “increasingly tight labor market”, and the jump in prices which they attributed to supply and demand imbalances and the reopening of the economy. US inflation hit 6.8% in December, its highest since 1982.

Related: US inflation rate rose to 6.8% in 2021, its highest since 1982

Some policymakers also argued the Fed could stat to cut the size of its balance sheet “relatively soon” after beginning to raise the federal funds rate. It’s currently on track to end its pandemic stimulus bond-buying programme in March.

The minutes spooked Wall Street, sending the tech-focused Nasdaq Composite down by over 3% in its biggest one-day drop since February.

A strong US jobs report (US companies added 807,000 employees in December) also fuelled expectations that the Fed could normalise policy faster.

Ipek Ozkardeskaya, senior analyst at Swissquote, explains:

Yesterday has been a deep red day for the US equities, as the FOMC minutes hinted at earlier and a faster rate normalization path, and the reduction of the Fed’s balance sheet soon after the first rate hike. The extra hawkish element hammered the sentiment sending the US yields higher and the equities lower. The better-than-expected ADP data certainly gave an extra support to the Fed hawks.

The ADP data revealed that the US economy added more 800K new private jobs in December, twice the 400K expected by analysts, and as strong as the figures we used to see at the heart of the post-pandemic recovery last year. But helas, the strong data added to the hawkish Fed expectations, as it reinforced the Fed’s view that the US economy is close to a full employment and it’s time to move on.

We are now stepping into a period where good data is bad as it fuels the Fed hawks, and bad data is bad, as well, because it can’t fuel the Fed doves.

Asia-Pacific markets have followed Wall Street’s lead, with Japan’s Nikkei sliding 2.9%.

Britain’s FTSE 100 index is down over 1% in the futures market, while European stock futures have dropped nearly 2%.

There’s a flurry of economic data ahead, which will show how the UK service sector, car dealers and eurozone builders fared last month as the omicron wave hit. We also get the latest US jobless claims report.

The agenda

  • 8.30am GMT: Eurozone construction PMI report for December
  • 9am GMT: UK car sales for December
  • 9.30am GMT: UK service sector PMI report for December
  • 9.30am GMT: ONS publishes weekly economic activity and business insights report
  • 1pm GMT: German inflation rate for December
  • 1.30pm GMT: US weekly jobless claims
  • 1.30pm GMT: US trade report
  • 3pm GMT: US factory orders

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