Retailers count the cost of a wet summer
Plus, Wimbledon choosing to leave $100m on the table, Asda scraps its four-day work week and Thames Water needs fresh funds
This article is an online version of our Off to Lunch newsletter. Sign up to receive it straight to your inbox here.
Summer is in full swing… or is it? While Las Vegas bakes in 49°C heat and Japan reaches temperatures upwards of 40°C for the first time in its history, the UK’s summer has been nothing but wet. Eight full days into the month and some southern parts of the country have already seen more rainfall than they usually get in the whole of July.
This is having an impact on the economy and in particular consumer spending. The toll of June’s poor weather is clear in new figures from the British Retail Consortium (BRC).
In a joint report with KPMG, the BRC found that overall sales fell by 0.2 per cent last month, compared to growth of 4.9 per cent in the same month a year ago. While the cost of living is a key factor, the BRC’s CEO Helen Dickinson says cooler weather has dulled consumer spending.
She notes: “Sales of weather-sensitive categories such as clothing and footwear, and DIY and gardening were hit particularly hard, especially compared to the surge in spending during last June’s heatwave.”
Across retail, non-food sales fell 2.9 per cent year on year over the three months to June, whereas last June they grew by 0.3 per cent. Food sales, meanwhile, increased by 1.1 per cent year on year, compared to 9.8 a year ago and below the 12-month average of 5.5 per cent.
Other figures released today by Barclays show a 0.6 per cent year-on-year decline in card spending for June, marking the first drop in card spending in more than three years. The data shows retail spending fell by 2.6 per cent, fuelled by an almost 8 per cent plunge in clothing sales.
This poor weather is having an impact beyond retail. Some 79 matches were cancelled at Wimbledon between Friday and Sunday, while attendance in the first week of the tournament was down 4 per cent due to the inclement weather. Sally Bolton, the chief executive of the All England Lawn Tennis and Croquet Club, has pointed out that the championship has a range of contingencies to make sure that all games are played despite it looking like the poor weather is set to continue this week.
Joe Pompliano has written a fascinating look into the business of Wimbledon and how it leaves close to $100m on the table a year to protect and maintain control of the event’s legacy. He also breaks down the championship’s revenue and how it handpicks only a few blue-chip sponsors.
You can read this here.
Business Question
Who am I?
- I co-founded my company in 2000
- It listed on the AIM in 2001
- I stepped down as CEO in 2015
- I am a minority shareholder at AFC Wimbledon
- My brother is also a well-known entrepreneur
- My company was founded as As Seen On Screen
The answer can be found at the bottom of the page.
Business in Brief
Everything you need to know
1. Interest rates should be held again next month rather than be cut for the first time in more than four years, a Bank of England rate-setter has said. Jonathan Haskel, a member of the Bank’s Monetary Policy Committee, said he “would rather hold rates” at 5.25 per cent until there is more certainty that inflation pressures have “subsided sustainably”. You can read more here.
2. Chancellor Rachel Reeves has said the date for the government’s first budget will be announced before the Commons summer recess and spoke of “short-term political pain to fix Britain’s foundations”. Prime minister Sir Keir Starmer is expected to cut short the summer break and have MPs sit until 31 July. You can read more here.
3. Asda is scrapping plans to introduce a four-day week due to complaints from exhausted staff. The supermarket chain launched a trial that saw employees work their 44-hour week over four days instead of five for the same pay. That translated into 11-hour shift patterns for labour-intensive work. You can read more here.
4. Thames Water said it intended to tap investors for fresh funds as it would run out of money by next June without a cash injection. The company has £15.2bn of debt, up £1.3bn on the previous year, the bulk of which could be added to the public purse if the government stepped in to renationalise the troubled company. You can read more here.
5. The co-founder and chief executive of Revolut is to cash in part of his multibillion-dollar stake in the company as part of a $500m (£391m) share sale. Sky News has learnt that Nik Storonsky plans to offload stock worth tens or even hundreds of millions of dollars in the secondary deal in the coming weeks. You can read more here.
Business Quotes
Inspiration from leaders
“The leader is one who, out of the clutter, brings simplicity. Out of discord, harmony. And out of difficult, opportunity.”
– Albert Einstein
Business Thinker
Ideas on the future of business and leadership
1. ? Can Labour lift UK business investment? ?
2. ? Does Burberry have the wrong strategy? ?
3. ? I hope this AI thing works out ?
And finally…
Some slightly depressing news for those who contribute to the more than 100 million cups of tea drunk every day in the UK. Extreme weather in India could see the price of tea rise by 20 per cent.
Senior tea planter and former chairman of India’s Tea Board, Prabhat Bezboruah, says: “Extreme weather events are hurting tea production. Excessive heat in May, followed by ongoing flooding, are reducing output.”
Bezboruah warns that India’s production of tea could be down by 100 million kg. India produced a record 1.4 billion kg of tea in 2023.
You can read more here.
The answer to today’s Business Question is Nick Robertson.
