Retail concern
Footfall falls
Despite a later Easter that brought with it better weather than last year’s shivery Easter conditions, footfall across the UK’s main shopping centres was down compared with last year’s four-day holiday weekend. This deals a blow to retailers on the back of disappointing March sales figures from the British Retail Consortium which reported a 1.7 per cent drop in like for like sales over the month. The Easter weekend saw footfall on high streets drop by 3.5 per cent, and by 5.3 per cent in shopping centres although out of town retail parks, possibly boosted by DIY stores, saw footfall leap 6.1 per cent against last year.
Mortgages up, lending down
Imbalance concern
Despite continued surging mortgage lending as the housing market maintains its relentless march upwards, lending to businesses has continued to travel in the opposite direction. The latest Bank of England trends in lending report showed a £500m drop in business lending in the three months to February compared with the previous year, although this is much reduced from the £3.3bn reversal reported in the preceding three month period. Meanwhile, unsecured lending to households has followed the trend set in the mortgage market and rose by 4.8 per cent in February.
McDroop
Sales squeezed
Sales at US food giant McDonalds have declined for the fifth month in a row as the fast food behemoth continues to grapple with the economic woes facing many lower income customers in the US in particular. Management is targeting further cost cutting including turning over the management, and thus responsibility for upkeep, of more of its 35,0000-strong restaurant estate to franchisees. First-quarter profits at McDonalds slipped from $1.27bn to $1.2bn despite a 1 per cent rise in revenues, undershooting consensus expectations. US same store sales slipped by 1.7 per cent compared to group-wide same store sales which edged ahead by 0.5 per cent.
Kapow!
Gotham hits Quindell
A scathing 74 page research note from little-known US outfit Gotham City hammered shares in Aim-traded insurance services business Quindell on Tuesday, halving the value of the company at one point in intra-day trading. Gotham, which admitted that it may be holding or shorting shares in Quindell at the time of publication made a series of allegations and suggested that the shares were only worth a fraction of their market value. Quindell, which is in the process of planning a move up to the Main Market, hit back with a sharp rebuke and threats of legal action.
See www.investorschronicle.co.uk/comment/chronic-investor-blog for more
Eurohope
Data up
Business activity in the eurozone’s rose to close to a three-year high in April, beating economists’ forecasts. Germany led the way with its Purchasing Managers Index reading rising from 54.3 to 56.3 although its fellow heavyweight France continues to struggle in comparison with its PMI reading shrinking from 51.8 to 50.5. Meanwhile, the UK economic recovery appears to be picking up pace with the Bank of England increasing its forecast for first-quarter growth to 1 per cent according to the latest Monetary Policy Committee meeting minutes.
Renewable boost
Eight contracts
The government has announced contracts for eight new large-scale renewable energy projects under its new energy Contracts for Difference subsidy scheme. The eight projects should add a total of 4.5GW of producing capacity to the UK’s energy mix and are valued in total at £12.5bn with the government estimating that they will create 8,500 jobs. It gives a boost to the offshore wind sector, with five new large scale projects approved, with the other three projects being biomass power plants. Drax, which already runs one biomass plant, was given a contract for the conversion of a second but will appeal the refusal of a new CfD contract for a third site.
