Finance

Sainsbury’s warns cost of living squeeze will intensify; UK car sales slide – business live


Introduction: Sainsbury’s CEO warns cost of living squeeze will intensify

Good morning, and welcome to our rolling coverage of business, the world economy, the financial markets, and the cost of living crisis.

The squeeze facing UK households will only intensify in the coming months, as inflation hits incomes.

That’s the warning from Sainsbury’s boss Simon Roberts this morning, as the supermarket chain reports a drop in underlying sales for the last quarter.

Roberts, chief executive of the supermarket group, says “We really understand how hard it is for millions of households right now”, with inflation hitting a 40-year high of 9.1% in May.

Customers are “watching every penny and every pound”, Roberts says, and he fears the pressures on budgets will get worse, as Sainsbury’s “invests £500 million” to keep prices down.

Roberts says:

The pressure on household budgets will only intensify over the remainder of the year and I am very clear that doing the right thing for our customers and colleagues will remain at the very top of our agenda.

Sainsbury’s underlying sales fell by 4% in the 16 weeks to 25 June (excluding fuel sales), led by weakness in general merchandise as cash-strapped consumers held back on discretionary spending.

Grocery sales down 2.4% compared with last year (when pandemic restrictions boosted spending at supermarkets), while sales at its Argos division fell 7% in the last 11 weeks of the quarter.

On Thursday, Sainsbury’s shareholders will vote on whether it should pay the independently set living wage for all staff and contracted workers.

My colleague Sarah Butler explained last week:

Sainsbury’s has raised pay for its 171,000 direct employees across more than 1,400 stores in the UK to the living wage, which is independently calculated for the Living Wage Foundation charity, of at least £9.90 an hour outside London or £11.05 in the capital.

However, it has not made the same commitment to contractors.

Today, Roberts says:

We are proud to be the first major supermarket to pay the Living Wage to all colleagues, regardless of where they live – and to have increased Sainsbury’s colleague pay by 25% and Argos by 39% over the past five years.

Also coming up today

The latest UK car sales data are expected to show that registrations tumbled by nearly a quarter year-on-year in June, as the sector continues to struggle with supply disruption (more on that shortly).

The Bank of England releases its latest Financial Stability Report this morning, which will analyse the stability of the UK financial system and what it is doing to remove or reduce any risks to it.

In parliament, MPs on the Business, Energy and Industrial Strategy Committee will examine the strengths and weaknesses of the semiconductor industry and its supply chain in the UK, at a hearing.

We also get the latest healthcheck on UK and eurozone services companies.

In the City, the FTSE 100 index is set to open a little higher as European stocks rally. But copper is languishing ner a 17-month low, on concerns of a possible recession.

The agenda

  • 9am BST: UK new car sales for June
  • 9am BST: Eurozone service sector PMI survey for June
  • 9.30am BST: UK service sector PMI survey for June
  • 10.15am BST: BEIS committee holds hearing into UK semiconductor industry
  • 10.30am BST: Bank of England’s financial stability report
  • 11am BST: Bank of England holds press conference
  • 3pm BST: US factory orders for May

SAS files for bankruptcy protection in the United States as it fights for survival

The tail fin of a parked Scandinavian Airlines (SAS) airplane is seen on the tarmac at Copenhagen Airport.
The tail fin of a parked Scandinavian Airlines (SAS) airplane is seen on the tarmac at Copenhagen Airport. Photograph: Andrew Kelly/Reuters

Scandinavian airline SAS has filed for bankruptcy protection in the United States, as it tries to push through a financial restructuring as pilots start strike action.

SAS AB said this morning it had filed for chapter 11 bankruptcy protection, to accelerate a restructuring plan announced in February.

Wage talks between SAS and around 1,000 cockpit crew, who are pushing for an improved pay deal, collapsed on Monday, triggering a strike that adds to travel chaos across Europe this summer.

The company said in a statement on Tuesday it would continue to serve its customers throughout the bankruptcy process, although the pilot strike is impacting its flight schedule.

Carsten Dilling, chairman of the Board of SAS, explained:

The Board has concluded that legal tools are required to make progress in our ongoing negotiations with key stakeholders, and ultimately to succeed in making SAS a competitive and financially strong business.

The process we have commenced will enable SAS to continue our more than 75-year legacy of being integral to Scandinavian infrastructure and societies.

Sainsbury’s says it is “investing over £500m” in the two years to March 2023 in keeping its prices low.

This is being funded by cost savings, the company tells shareholders, adding it is “continuing to inflate behind competitors”. [ie, raising prices less quickly].

A new term for the City jargon book….

Today’s Sainsbury results @sainsburys contain one of the funniest (and dumbest) sentences ever in an RNS “we continue to inflate behind competitors.” I think I know what they mean …

— Dominic O’Connell (@dominicoc) April 28, 2022

On June’s slump in UK car sales, Bloomberg says:

First-half sales fell 12% to around 800,000 vehicles — the second-weakest showing in 30 years.

The SMMT has repeatedly called for government support to help soften the blow of surging energy costs as carmakers try to transition to producing zero-emissions vehicles.

The UK has seen auto production steadily decline over decades, with uncertainty over the future of its trading relationship with the European Union adding to the industry’s woes.

‘It’s hard getting money to stretch’: single mothers say they need support

Jessica Murray

Jessica Murray

Kelly Ross
Kelly Ross Photograph: Graeme Robertson/The Guardian

Lone parents are suffering particular hardship in the cost of living squeeze, as a Guardian special report this week shows.

Kelly Ross, a single mother to her three-year-old son Charlie, has just found out her energy bills are tripling in price, from £94 a month to £292.

With summer holidays on the horizon, there’s not much left in the pot for anything other than essentials, and she finds it hard to escape the constant burden of money worries.

“I think I’m glad that my son is this young at the minute because he doesn’t really know that we’re missing out on things,” the 39-year-old says. “It’s hard getting the money to stretch and still trying to give your child a life for him to look back at with fond memories.”

As she speaks, her son Charlie zooms around Littlethorpe village hall on a trike while other parents and children play and chat. This is her one weekly respite, a free group for struggling parents in the area run by the Leicestershire-based charity Home-Start Horizons.

She says:

“Nobody judges. If one day you want to come in crying, they’ll just make you a tea and give you a hug,” she says.

Here’s the full story:

Mothers like Ross are facing a bleak winter.

Research by the Institute for Fiscal Studies revealed this week how a decade of austerity, during which vital benefits have been frozen or cut, has resulted in child poverty in single-parent households rising by almost 10% – compared with only 2% for two-parent families.

Half of all children being raised by one parent are now in relative poverty.

Jim Holder, editorial director of magazine and website What Car?, said car buyers are being hit by a combination of issues, including rising energy bills which push up manufacturing costs, and thus forecourt prices.

Holder warned:

“The result is longer waiting times on cars which will cost more to buy.”

UK car sales slide in June

The UK automotive industry has suffered its worst June for new car sales since 1996, amid the cost of living crisis and supply chain woes.

Registrations of new cars fell by around 24% last month compared with June 2021, according to preliminary figures from the Society of Motor Manufacturers and Traders (SMMT).

The UK car industry has suffered its worst June since ‘96 with a drop in sales last month of 24% compared to June ‘21.
Full figures out soon…#SMMT

— Ginny Buckley 🇺🇦 (@GinnyBuckley) July 5, 2022

Rising inflation hit consumer confidence – deterring people from buying big ticket items such as a new car. And even if you wanted to take the plunge, manufacturers continued to struggle to obtain components.

As well as the well-publicised shortage of semiconductors, carmakers face a shortage of wiring harnesses due to the conflict in Ukraine. Those harnesses are used to bundle together electric cabling that controls different systems in a car.

Registrations so far this year are thought to have fallen by 12% to about 800,000 units, due to those challenges. We’ll find out when the data is released at 9am…

Introduction: Sainsbury’s CEO warns cost of living squeeze will intensify

Good morning, and welcome to our rolling coverage of business, the world economy, the financial markets, and the cost of living crisis.

The squeeze facing UK households will only intensify in the coming months, as inflation hits incomes.

That’s the warning from Sainsbury’s boss Simon Roberts this morning, as the supermarket chain reports a drop in underlying sales for the last quarter.

Roberts, chief executive of the supermarket group, says “We really understand how hard it is for millions of households right now”, with inflation hitting a 40-year high of 9.1% in May.

Customers are “watching every penny and every pound”, Roberts says, and he fears the pressures on budgets will get worse, as Sainsbury’s “invests £500 million” to keep prices down.

Roberts says:

The pressure on household budgets will only intensify over the remainder of the year and I am very clear that doing the right thing for our customers and colleagues will remain at the very top of our agenda.

Sainsbury’s underlying sales fell by 4% in the 16 weeks to 25 June (excluding fuel sales), led by weakness in general merchandise as cash-strapped consumers held back on discretionary spending.

Grocery sales down 2.4% compared with last year (when pandemic restrictions boosted spending at supermarkets), while sales at its Argos division fell 7% in the last 11 weeks of the quarter.

On Thursday, Sainsbury’s shareholders will vote on whether it should pay the independently set living wage for all staff and contracted workers.

My colleague Sarah Butler explained last week:

Sainsbury’s has raised pay for its 171,000 direct employees across more than 1,400 stores in the UK to the living wage, which is independently calculated for the Living Wage Foundation charity, of at least £9.90 an hour outside London or £11.05 in the capital.

However, it has not made the same commitment to contractors.

Today, Roberts says:

We are proud to be the first major supermarket to pay the Living Wage to all colleagues, regardless of where they live – and to have increased Sainsbury’s colleague pay by 25% and Argos by 39% over the past five years.

Also coming up today

The latest UK car sales data are expected to show that registrations tumbled by nearly a quarter year-on-year in June, as the sector continues to struggle with supply disruption (more on that shortly).

The Bank of England releases its latest Financial Stability Report this morning, which will analyse the stability of the UK financial system and what it is doing to remove or reduce any risks to it.

In parliament, MPs on the Business, Energy and Industrial Strategy Committee will examine the strengths and weaknesses of the semiconductor industry and its supply chain in the UK, at a hearing.

We also get the latest healthcheck on UK and eurozone services companies.

In the City, the FTSE 100 index is set to open a little higher as European stocks rally. But copper is languishing ner a 17-month low, on concerns of a possible recession.

The agenda

  • 9am BST: UK new car sales for June
  • 9am BST: Eurozone service sector PMI survey for June
  • 9.30am BST: UK service sector PMI survey for June
  • 10.15am BST: BEIS committee holds hearing into UK semiconductor industry
  • 10.30am BST: Bank of England’s financial stability report
  • 11am BST: Bank of England holds press conference
  • 3pm BST: US factory orders for May





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