MARKET REPORT: Retail shares tumble as families rein in spending

High Street retailers felt a chill amid worries about spending in the build-up to Christmas as inflation bites.

Tesco was forced to trim profit forecasts for the year, and shares in a string of household names tumbled into the red.

Fashion chain Next dropped 5.3 per cent, or 268p, to 4762p, retailer M&S sank 5.4 per cent, or 5.57p, to 96.88p, sportswear giant JD Sports was down 3.2 per cent, or 3.45p, to 104.5p and Mike Ashley’s Frasers Group dropped 2.5 per cent, or 17p, to 671.5p.

High Street hit: Fashion chain Next dropped 5.3%, M&S sank 5.4%, sportswear giant JD Sports was down 3.2% and Mike Ashley’s Frasers Group dropped 2.5%

The slide came amid renewed concerns about the outlook for the economy, with households likely to rein in spending as energy bills and mortgage rates soar.

Supermarkets were also under pressure following the update from Tesco as it slumped 4.1 per cent, or 8.7p, to 201.3p. Online grocer Ocado was down 10 per cent, or 50.9p, to 456.1p and Sainsbury’s tumbled 4.7 per cent, or 8.4p, to 172.2p.

The FTSE 100 fell 0.48 per cent, or 33.84 points, to 7052.62 and the FTSE 250 was down 1.46 per cent, or 259.73 points, to 17,562.42.

Oil stocks were on the rise after Opec+ agreed the deepest cuts to production since the 2020 pandemic. 

With crude rising further above $90 a barrel, BP gained 1.3 per cent, or 5.7p, to 460.2p, while Shell was up 1.7 per cent, or 40.5p, to 2378.5p and Harbour Energy rose 0.02 per cent, or 0.1p, to 451p.

The rally came a day after the boss of Shell opened the door for a windfall tax on oil and gas firms. 

Ben van Beurden told an energy conference in London that helping the poorest in society may mean ‘governments need to tax people in this room to pay for it’.

In her first outing as Prime Minister at the Tory party conference, Liz Truss ruled out another windfall tax on energy giants.

On the acquisition front, engineering group Hill & Smith swooped on the US portable solar construction manufacturer and supplier National Signal. 

Stock Watch – Strix

Strix has agreed to buy the Australian tap manufacturer and supplier Billi for around £38million.

The kettle controls maker expects to complete the takeover this year. To fund the deal, Strix raised around £13million by selling 11,304,347 shares at 115p, a 10 per cent discount to the closing price on Tuesday.

The AIM-listed firm has also refinanced its existing £80million debt facility and taken on a new £49million loan.

The shares fell 5.8 per cent, or 7.4p, to 120.4p.

The deal is worth around £22.2million with a further performance-related payment of around £3.5million up for grabs.

Hill & Smith has also completed the takeover of Widnes Galvanising for £3.7million, and its shares rose 4.4 per cent, or 43p, to 1014p.

Hilton Food Group had a much-needed boost from the City only weeks after its worst day on the stock market. Peel Hunt described the food packager’s operations in New Zealand and Australia as ‘world class’ following a visit.

‘These provide the blueprint for what can be achieved elsewhere,’ the broker added. Last month Hilton’s half-year results saw shares tumble 28.3 per cent after warning its full-year profit would be lower than expected. 

Yesterday the shares gained 6.2 per cent, or 35p, to 597p. Meanwhile Hyve Group hailed a surge in business as some of its biggest in-person events returned in style. 

The conference and trade show organiser said revenue was around £122million last year compared with £22million 12 months earlier.

The group is also in talks to sell its Turkish business for up to £8million as it trims its portfolio. The shares were up 8.2 per cent, or 4.1p, to 54.1p.

Housebuilder Redrow has renewed its commitment to ensuring that leaseholders have a safe place to live and are not saddled with the cost of repairing high-rise blocks.

In a win for cladding victims, it has signed up to the Welsh government’s building safety pact, meaning it will fix all buildings over 11 metres with fire safety issues which it has been involved in over the past 30 years.

It has set aside £200million as part of the pledge it signed in England in April and does not think this will increase, having agreed to the Welsh pact. Investors may need more convincing as shares fell 3 per cent, or 12.6p, to 410.6p.