Like discarded Christmas trees, they will start piling up this week: more trading updates from UK retailers – those melancholic January reminders of another festive season passed.

Last week, just a few hit the pavement: remnants of cheer from Next and John Lewis, until Debenhams reminded everyone that the fun’s over with a profit warning.

This week, like all those Norwegian firs that somehow find their way onto street corners overnight, loads more will appear: from Marks & Spencer, Tesco, Sainsbury, Morrison’s and more.

Overall, the signs aren’t good. Visa’s UK consumer spending index, which is compiled by data company IHS Markit, shows that households’ expenditure was 1 per cent lower, after adjusting for inflation, in December 2017 than in the same month a year earlier. That represents the fourth consecutive month in which consumer spending fell – the weakest annual performance for household expenditure since 2012, based on debit and credit card payments.

And, this morning, Mothercare added to the woes. It has also warned on profits, after its turnround plan hit problems over Christmas. Despite trying to boost web sales, weakness in the UK market led to a 7 per cent fall in online sales in the 12 weeks to the end of 2017, compared to the previous year, and a similar drop in overall like-for-like domestic sales.

Mothercare said performance overall was “below expectations”, with international sales also “challenging”. That drove global sales down 8 per cent in total — although statutory revenues, which include royalty payments and goods sent to franchisees slipped by only 2.4 per cent.

Like Next, Mothercare resisted discounting in the run up to Christmas in an effort to “protect [its] brand positioning”, but heavier cuts to prices in the post-Christmas sales as a result were expected to lead to a reduction in full year margin.

Still, analysts at Peel Hunt suggests this week’s trading updates won’t all be monuments to New Year misery: “The consumer was out to spend, although the product and pricing had to be competitive,” they suggest. “The Debenhams’ profit warning was the most predicted slip-up, which serves to highlight the structural differences across the sector – while our structural growth picks have fully mitigated FX pressures, largely grown gross margins, and will hopefully post double-digit revenue growth over peak, the structurally challenged retailers such as Debenhams are facing up to declining gross margins and inflation rates that are exceeding revenue growth.”

Defence contractor Babcock is looking forward to a more productive 2018, though, by teaming up with Thales, Harland & Wolff, designer BMT and Ferguson Marine to bid for construction of the UK government’s new Type 31e frigate.

Its so called ‘Team 31′ will aim to deliver world-class ships while at the same time spreading “economic benefits throughout the UK”. Ferguson Marine on the Clyde, Harland & Wolff in Belfast and the Babcock facilities in Fife and Devon will all have key roles to play, while much of the equipment provided by Thales and others will support jobs across Britain.

Under the arrangement, Babcock will act as the overall programme lead, whilst Thales will have overall responsibility for the development of the Mission System solution. Babcock and BMT will use their experience in the development of designs for both naval and commercial vessels to coordinate production

Today, the defence secretary Gavin Williamson is due to visit Babcock’s Appledore shipyard in Devon, to demonstrate the government’s commitment to the £1.5bn Type 31 programme — despite a review of military capability that could mean certain procurement projects are postponed or cancelled.

But Mr Williamson’s visit also indicates the level of government support for Babcock’s bid. Industry watchers suggest the Ministry of Defence is keen to use the Type 31 programme to break BAE Systems’ monopoly on naval shipbuilding in Britain. BAE, which has led naval programmes since the government decided almost a decade ago to concentrate shipbuilding on the Clyde in Scotland, has partnered Cammell Laird to bid for work on the Type 31. But, for the first time in 30 years, BAE is taking a back-seat role in the bid for the new warship, in a nod to the MoD’s desire to spread the benefits of naval programmes to other shipyards.

And, finally, the Opening Quote Ashes update:

Fifth Test, Sydney:
England 346 & 180
Australia 649-7 dec
Australia won by an innings and 123 runs; and won the Ashes series 4-0
Prevailing sentiment: At least that’s over for four years…

FT Opening Quote, with commentary by Matthew Vincent, is your early Square Mile briefing. You can sign up for the full newsletter here.

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