Dwindling supermarket sales have weighed heavily on the performance of UK plc, causing listed companies’ revenues to dip 2.2 per cent to £341.7bn in the last quarter, according to new research from retail stockbroker The Share Centre.
Supermarkets, which account for nearly one third of the UK's publicly listed companies, saw sales fall below £100bn for the first time since 2010, causing profits to slide as established names continue to vie with the competition from discounter stores, several of which are privately owned. Revenues across the supermarket sector fell 3.1 per cent over the quarter to £99bn.
Falling sales were not universal across the companies reporting, however. Overall, more than half of the 350 listed firms reported increased revenues over the three months from April to June, with the industrial and retail sectors fairing particularly well.
Despite this, the research indicates an ongoing struggle to grow margins across sectors. Operating profit fell for the eighth time in the last nine quarters, falling by a faster rate than sales. Combined profits fell by three per cent over the quarter to £27.1bn, after adjusting for index changes.
Helal Miah, investment research analyst at The Share Centre, said: “It has been a tough couple of years for UK plc, battling against global economic headwinds, and sector-specific problems that have beset commodities, energy, and food retailers. Supermarkets have had a particularly difficult time of it, facing intense price pressure and competition from discounters.
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Miah added that the recent Brexit vote is likely to continue to weigh on profits and hamper demand across UK plc sectors, most notably retail and construction. Meanwhile more defensive sectors such as utilities and pharmaceuticals are likely to be well insulated, she said.
“The implications of the economic slowdown will mean lower demand for sectors such as housebuilders and retailers, while the travel industry is already feeling the effects. Easyjet saw its costs soar by £40m within four weeks of the referendum. Financial services may suffer too, if passporting to the EU falls by the wayside. Profits in these sectors will be harder to come by in Brexit Britain."