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UK retail sales fell in June compared to a year earlier, as consumer spending suffered from damp weather in the month, according to the latest BRC-KPMG Retail Sales Monitor.

It showed that total UK retail sales fell by 0.2% in the five weeks to 29 June, compared with growth of 4.9% in June 2023.

Despite the decline, this was actually an improvement on the average decline of 1.1% over the past three months.

Grocery sales rose 1.1% year-on-year in the three months to June, compared with growth of 9.8% in June 2023.

Non-food sales fell 2.9% year-on-year in the three months to June, compared with growth of 0.3% in June 2023. This is steeper than the average decline of 1.9% over the past 12 months and saw sales fall in June.

In-store sales of non-food items fell 3.7% year-on-year in the three months to June, compared with growth of 2.0% in June 2023. Online sales of non-food items fell 0.7% year-on-year in June, compared with a decline of 1% in June 2023.

British Retail Consortium CEO Helen Dickinson said: “Retail sales performed poorly in June as cooler weather in the first half of the month depressed consumer spending. Sales of weather-sensitive categories such as clothing and footwear, as well as DIY and gardening, were particularly hard hit, especially compared to the increase in spending during the heatwave in June last year.

“Electronics sales had a better month as football fans cheering on their national teams upgraded their home entertainment systems and people replaced their pandemic purchases. Retailers remain hopeful that sales will follow as the summer social season gets into full swing and the weather improves.

“Retail is vital to the country’s economy as a major source of employment and investment. The industry shapes local communities and provides three million jobs across the country. Because of its size and reach, retail can make a huge contribution to Labour’s policy goals, and the industry stands ready to work with the new government to find ways to make this happen.”

Linda Ellett, UK head of consumer, retail and leisure at KPMG, said: “Summer may finally be here, but that hasn’t convinced consumers to hit the shops. Retail sales were down 0.2% in June.

“Homewares topped the best-selling categories, with homewares, cooking accessories and furniture all seeing positive growth in June as consumers made the most of the sunshine to enjoy their time at home. Computer sales also continued to perform well, up double-digits both online and on the high street. Despite the warmer weather and football giving people the opportunity to get home, food and drink sales were disappointing in June, growing just 1.16%, while clothing and footwear also saw disappointing performances, with negative growth both on the high street and online.

“Despite the easing of pressures on household finances, with petrol and energy costs and retail price inflation all continuing to fall, consumers remain incredibly reluctant to take the brakes off their spending. The stimulus of fine weather, Wimbledon and Euro 24 that was hoped would boost consumer spending has so far failed to materialise and many households are still worried about their finances.

“Retailers, currently running to stand still after exhausting all available means to cut costs and boost sales through promotions, will look to the new government to stimulate the economy and confidence. Overall economic conditions may be improving slowly, but the health of the sector remains fragile and action is needed now to help support this vital economic contributor – particularly in neglected areas such as corporate tax reform.”

Speaking about the food and drink sector, Sarah Bradbury, CEO of IGD, said: “Despite the unusually cool weather for most of June, the grocery market has seen both value and volume growth over the past month, compared to June 2023.

“It is notable that value and volume performance improved in the last week of June, which coincided with the short but intense heatwave felt across the UK. It is also worth bearing in mind that while value and volume growth is down compared to last month’s performance, the market is factoring in the significant growth that occurred in June 2023 on an annualised basis.

“In other words, while the election campaign did not affect consumer confidence in June, we can expect a boost after the election. We have seen a positive boost in consumer confidence immediately after the previous three general elections, so we can expect something similar as we enter July.”

Morning update

Naked wines has negotiated a new $60 million credit facility with PNC Bank, replacing its previous facility with Silicon Valley Bank.

The size of the main facility is $60 million, secured by global wine assets, with a term of five years.

A single financial performance covenant requires fixed charge coverage to be greater than 1.2x, but is only tested if outstanding available liquidity is less than $12 million.

Naked Wines said the new facility provides it with additional liquidity availability due to a higher advance rate, improved inventory adequacy and no minimum cash holding requirement

Interest costs will also fall due to improved margins and the removal of the requirement to hold cash. In addition, there will be greater operational flexibility, particularly due to the reduction from three to one financial covenant.

The Company expects to have more than $40 million of available liquidity on the facility base at the time of completion

Rodrigo Maza, CEO, commented: “I am pleased to have agreed this new facility with PNC Bank and welcome them as our new financial services provider. The new facility demonstrates the strength of Naked’s balance sheet and business prospects, while strengthening our liquidity and ability to invest in delivering the finest wines to our customers. We look forward to working closely with PNC and continuing to support independent winemakers around the world.”

Meanwhile, CFO James Crawford has informed the board of his intention to step down in the fall of 2024, following negotiations on this facility.

Naked said this timing is consistent with the two- to three-year incentive arrangement agreed with James when he returned to the board as CFO in 2022.

He will go through a transition process, including overseeing the completion of the audit and the presentation of the 2024 results, before leaving the company in the fall. A successor is expected to be in place by then.

Rowan Gormley, non-executive chairman, said: “James has been with the company for over 10 years, having served as CFO and a period as Managing Director of Naked Wines UK. During his tenure, Naked has grown from an annual turnover of £40m to £290m in FY24 and James’ leadership and expertise have played an invaluable role in navigating that growth and the challenges that have followed.

“On behalf of the Board and the Company, we express our gratitude to James for his service and wish him the very best in his future endeavors.”

Crawford said: “I am incredibly proud of what we have achieved in the decade I have been at Naked. We have grown the business tremendously, overcome some significant challenges and created an organisation that I believe can thrive for a long time to come. I rejoined the board in July 2022 to address the post-pandemic challenges and get the business back on a solid footing. Over the past year, we have reduced the cost base and inventory levels are now coming down.

“Today’s announcement of our refinancing, which brings additional liquidity and flexibility to the business, represents the end of this chapter and the right time for me to step back from the role of CFO. I remain a dedicated and passionate supporter of Naked and will cherish the lifelong friendships I have built during my tenure. I wish the Board, Maza and Naked’s exceptional management team the very best for the journey ahead.”

Elsewhere this morning, consumer spending on credit cards fell 0.6% year-on-year in June – the first decline since February 2021 – as colder weather at the start of the month hampered spending in clothes shops, pubs and garden centres.

Data from Barclays showed the cold early June 2024, in contrast to the sunshine and warm weather of 2023, which meant retail spending fell by 2.6% – the most significant year-on-year decline since June 2022 (-3.8%). Cutbacks on the high street saw in-store spending (excluding groceries) fall by 5.1%, while clothing sales fell by 7.7% year-on-year.

Supermarket spending fell for the first time in two years (-2.6%). This is because the majority of consumers (65%) indicate that they do less weekly shopping.

The slowdown can also be attributed to the fall in food price inflation, which has now fallen to its lowest level since October 2021 at 1.7%. Encouragingly, over a third (36%) of shoppers say they have noticed food prices rising more slowly in recent months.

Pubs, bars and clubs showed modest year-on-year growth in June (0.5%), with the influx of sports fans to watch the European Championships outweighing the bad weather. The category performed in the same way as in June last year.

However, it was a tougher month for restaurants, with sales down -11.5% year-on-year, although this was an improvement on the previous month (-15.7%). This reflects the selective approach cost-conscious consumers are taking when it comes to discretionary spending, with over half (52%) of those cutting back on non-essential spending choosing to spend less on eating out at restaurants.

Karen Johnson, head of retail at Barclays, said: “Our data once again shows the undeniable impact that unusual weather can have on consumer spending. Sluggish demand in early June even caused some fashion brands to adjust their sales schedules, although I was pleased to see the situation improve since then with the arrival of sunnier days.

“However, the gloom hasn’t depressed spending across the board, with takeaway, digital content and entertainment all benefiting from people staying at home. Hopefully we’ll see continued interest in the Euros – regardless of England’s fate – and sunnier weather driving people to their local pubs in July.”

At the markets this morning

Yesterday in the city

The FTSE 100 fell 0.1% to 8,193.5 points at the start of the week.

Britvic rose 4.5% to 1,264p after it announced it had accepted a £3.3bn bid from Carlsberg.

Other risers included Ocado, up 5.4% to 345.9p, Science in Sport, up 4% to 19.5p, B&M European Value Retail, up 2.9% to 456.5p, C&C Group, up 2.6% to 163.4p, Kerry Group, up 2.1% to 76.6p and Bakkavor, up 2% to 151p.

The day’s fallers included McBride, down 3.6% to 136p, Deliveroo, down 2.4% to 128.4p, Nichols, down 0.9% to 1,065p and Sainsbury’s, down 0.8% to 259p.