UK retail sales fell in April, with higher prices and poor weather blamed for keeping shoppers away.

The Office for National Statistics (ONS) said today that retail sales volumes were down 1.3% compared with March and the amount spent in the retail sector also decreased by 1.3%. Sales of food fell by 4.1%, the biggest monthly decline since May 2011.

Compared against April 2012, retail sales volumes last month were 0.5% higher but this was less than expected. The amount spent increased by 1.3%.

As with the monthly comparison, the greatest source of downward pressure came from the food sector, where the quantity of goods bought decreased by 3.8% and the amount spent was 0.2% lower year-on-year.

Consumers continued to turn to the Internet, with the average weekly spending online in April 2013 amounting to GBP571.7m which is an increase of 13.2% compared with April 2012. According to the ONS the amount spent online accounted for 10.0% of all retail spending excluding automotive fuel.

The British Retail Consortium (BRC) took an optimistic view of the April retail sales figures, saying that they are better than they look.

“April this year didn’t benefit from an Easter boost as in 2012, so sales look weak by comparison, especially for food which had its worst ever performance. The ONS figures actually suggest that April was broadly in line with March, if you take out the distorting effect of Easter timings,” commented Helen Dickinson, BRC director general.

Dickinson also highlighted the fact that the changeable weather this April meant that it was a mixed month for retailers. As temperatures rose towards the end of the month, demand for new-season clothing and footwear lifted following a slow sales due to the prolonged wintry weather.

The British Chambers of Commerce found little to cheer about in the ONS figures. Its chief economist, David Kern, said that the fall in retail sales volumes is disappointing and indicates that UK economic growth in the second quarter will be lower than the 0.5% growth envisaged in last week’s Bank of England Inflation Report.

UK supermarket chain Morrisons (LSE:MRW) will offer online grocery shopping by January 2014, the company confirmed today.

A long term agreement has been signed by Morrisons and online-only food retailer Ocado (LSE:OCDO) which combines affordable fresh food from Morrisons with Ocado’s end-to-end technology, logistics and distribution operations.

According to Morrisons this arrangement will enable the retailer to enter the online grocery market quickly with a profitable business model.

Ocado already has a partnership with Waitrose and the company claimed today that existing customers and its contractual agreement with Waitrose will remain unaffected by the new agreement with Morrisons. It is not yet clear how Waitrose will respond to the news about the Morrisons deal, but its managing director Mark Price was quoted by the Independent as saying that the company would be “looking very hard and carefully at the contract and the operational arrangements.”

The agreement announced today takes the form of a technology and services arrangement and a sale and leaseback of Ocado’s distribution centre in Dordon, Warwickshire.

Morrisons will make an initial payment of up to GBP170m to Ocado to acquire the Dordon facility and will invest a further GBP46m to expand it and establish a delivery network. As a result of this expansion, the distribution centre is projected to have a total capacity of 180,000 to 190,000 orders per week, of which 50% will be available for use by Morrisons.

The supermarket will also pay annual service costs and a contribution to R&D expenditure, while Ocado will receive a share of the positive EBIT of Morrisons.com.

Dalton Philips, chief executive of Morrisons, told the BBC that the company expects a return on its investment within three or four years.

Morrisons first announced in March that it was in talks with Ocado and Philips admitted then that it was a “late entrant” to the online food market.

UK-based technology company Invensys Plc (LON:ISYS) intends to spend a total of GBP600m (USD913m/EUR710m) on acquisitions in the next three to four years, focusing on targets in the software sector, CEO Wayne Edmunds told Bloomberg today in a telephone interview.

The cash that the company will use is part of the proceeds from the recent GBP1.74bn sale of its rail unit Invensys Rail Ltd to German engineering group Siemens AG (ETR:SIE). Invensys will seek to buy three to four companies a year, paying between GBP30m and GBP50m per each, Edmunds said.

He did not specify any targets but noted that often the way to step into the Indian or Chinese market is through an acquisition or a partnership with a local player.

Edmunds also stated that his company could offload other units. He refused to comment on whether Invensys had held additional discussions with Emerson Electric Co (NYSE:EMR) after the US industrial group’s initial interest in its rail division.

UK water and waste water treatment firm Severn Trent Plc (LON:SVT) said today it had turned down a conditional takeover proposal by Canada’s Borealis Infrastructure Management Inc, the Kuwait Investment Office and Universities Superannuation Scheme Ltd.

Yesterday, Severn Trent announced it had received an early-stage approach by the particular entities. Today, it had met with the consortium for the first time. However, the suitors have made an offer at just a modest premium to the target’s stock price prior to its announcement.

After consulting with its advisors, Severn Trent had determined that this proposal “completely fails to recognise the existing and potential value” of the company and for this reason it had rejected the offer, it explained.

Earlier this week, Magazine Financial News quoted sources as saying that Borealis and the Kuwait Investment Office could propose to pay between £22.50 ($34.24/€26.55) and £23.00 per share for Severn Trent, or around £5.3bn in total.

UK retail sales in April were affected by the earlier Easter this year, the British Retail Consortium (BRC) confirmed today.

A new report from the BRC shows that retail sales values in April 2013 were down 2.2% on a like-for-like basis from April 2012 and fell by 0.6% on a total basis, with growth negatively impacted by the fact that Easter fell in April last year but in March this year.

Online sales continued to increase, rising by 8.3% compared to April 2012.

BRC director general Helen Dickinson commented that, excluding the Easter distortion, April was actually a better month than March, especially for non-food sales. The weather had a big influence on buying habits, with the prolonged cold meaning that shoppers had little interest in new season clothing and footwear ranges early in the month but that changed when the weather warmed up.

Consumers’ willingness to spend remains volatile. “A convincing trend towards revival is hard to spot and competitive pricing is still critical to generating sales, despite the effect on margins and on retailers’ ability to invest in offering customers new ways to shop,” Dickinson added.

David McCorquodale, head of retail at consultancy firm KPMG, highlighted the fact that the three-month weighted average, which smooths out the effect of the timing of Easter, shows a total increase in retail sales of 2.6%. This indicates that the health of the retail sector is holding up and may be on a positive trajectory, although it is yet to be seen at what margins these sales are being achieved and what is the cost of fulfilling the online demand, he said.

Taking into account Shop Price Index inflation, total retail sales were down 1.0% in real terms in April while the three-month average shows growth of 1.6%.

Another insight into the state of the UK retail sector came this morning with the release of a trading update from shopping centres operator Intu Properties. The company, which owns or part-owns 15 shopping centres across the country, including Lakeside and Manchester’s Trafford Centre, said that the retail environment remains “difficult” and retailers continue to be cautious about entering into store commitments.

In the first quarter of 2013 footfall in Intu’s shopping centres was down 1% compared to a year earlier, although the company noted that this still represents a significant out-performance of Experian’s measure of UK national retail footfall, which declined by 4% as a result of the weak economic background.

Although shop failures, lease expiries and tenant caution over new store commitments are likely to continue to affect short term earnings, Intu said that it is maximising the opportunities available in the changing marketplace, for example by introducing free high-speed Wi-Fi, a new mobile website and click and collect services.

New car registrations in the UK increased again last month, rising by almost 15% compared to the same period last year.

The Society of Motor Manufacturers and Traders (SMMT) noted that there were more sales days this April than a year earlier, but said that the new car market is continuing to perform “surprisingly strongly.”

There were 163,357 new cars registered in April 2013, up 14.8% year-on-year and the best April performance since 2008.

In fact, the growth of the market in April was the strongest seen in 14 months.

SMMT interim chief executive Mike Baunton commented that the UK is continuing to perform ahead of the troubled eurozone, with consumer confidence, regular purchase cycles, attractive finance deals and wider market factors making new car buying favourable for motorists.

Last month’s growth was driven by the private sector, where volumes were up 32.3% compared to a year ago. Demand increased for cars of all fuel types, particularly petrol-fuelled cars. This is down to greater demand for small cars among private buyers.

According to the SMMT the Supermini segment remains the largest segment in the UK market while the Mini segment continues to post the best growth. The best selling model in April and in the year to date was the Ford Fiesta.

In addition to the strength in the market registered in April, the longer term trends are also positive.

In the first four months of 2013 new car registrations grew by 8.9% or more than 60,000 units compared to the same period last year, to 768,555 units. Over the past 12 months registrations rose by more than 150,000 units to 2.107 million units, although the SMMT pointed out that the 12-month total is still 12.3% short of the 2007 full-year total.

Looking ahead, the organisation expects new car registrations for the whole of 2013 to reach 2.106 million units, a 3% rise on 2012 volumes. This total is still some 300,000 units below the pre-recession market. Next year the number of registrations is predicted to grow further, to 2.123 million units.

UK-based private equity group Bridgepoint Capital Ltd has agreed to acquire French sealing solutions provider The Flexitallic Group from French buyout firm Eurazeo PME via a EUR450m (USD588.9m) deal, the target said.

Flexitallic manufactures and supplies industrial static sealing products such as industrial gaskets and dynamic and static packings to the oil and gas, power generation, chemical and petrochemical industries. Since 2006, when Eurazeo bought a majority stake in the company, Flexitallic has acquired six firms and bolstered its revenues eleven times to EUR210m, it said.

The sale will allow Flexitallic to continue its technological development and geographic expansion in the traditional markets in the US and Europe, as well as in other markets, such as China, it noted, adding that it intended to double its size in the next five years.

According to the buyer, the business being acquired offers significant growth opportunities in North America, where the group already operates, and also in Asia, Australia and South America.

Under the terms of the deal, Eurazeo will keep a minority stake in the business. The transaction is subject to regulatory approval and is seen closing in July.

UK grocery retailer J Sainsbury plc (LON:SBRY) on Tuesday said it was holding advanced discussions over a deal to take full control of Sainsbury’s Bank, a joint venture with Lloyds Banking Group plc (LON:LLOY).

The statement confirmed media reports from the weekend that the two JV partners were negotiating a transaction.

Sainsbury’s Bank, currently equally owned by J Sainsbury and Lloyds Banking Group, was set up in 1997, the first bank to be opened by a UK supermarket chain.
It offers products such as insurance, credit cards, savings and loans.

The statement from J Sainsbury provided no further details. The company is due to publish its financial results for 2012-2013 tomorrow.

Corporate insolvencies in England and Wales have continued to fall, despite several high-profile retail failures in recent months.

Official statistics released today by the Insolvency Service show that the number of compulsory liquidations and creditors’ voluntary liquidations in England and Wales in the first quarter of 2013 was 15.8% lower than in the same quarter a year ago. The number fell by 5.3% from the previous quarter.

At the same time, the number of administrations decreased by 28.5%, with 557 businesses failing during the first three months of the year compared with 779 in the same period of 2012. There was also a drop in the number of receiverships (down 29.8%) and company voluntary arrangements (down 18.9%).

Mike Jervis, business recovery partner at PwC, commented that corporate failures at such low levels, particularly of administrations, have not been seen since 2005 and the figures suggest that stakeholders are supportive of companies in distress and are willing to consider non-insolvency solutions.

The numbers are particularly striking in light of the fact that the total number of retail insolvencies fell by 47% between the first quarter of 2012 and the same period this year.

Meanwhile personal insolvencies have fallen to the lowest level for five years, the Insolvency Service report reveals. Just over 25,000 people in England and Wales were granted insolvency in the first three months of 2013, representing a fall of 12.9% on the corresponding quarter last year.

According to Matthew Chadwick of accountancy firm BDO, quoted by the BBC, the figures “continue to defy logic.” He said that it is hard to explain the lowest level of personal insolvencies since 2008 when this is set against the economic backdrop of limited job creation, heightened unemployment, raised inflation and low wage growth.

The Financial Conduct Authority (FCA) has warned homeowners with interest-only mortgages that they need to take control of their mortgage repayment planning.

Research carried out by the FCA, the UK’s new financial services industry regulator, shows that many people with this type of borrowing are expected to be in a good position to repay the mortgage when it is due for repayment. However, many others, particularly those whose mortgage is due to be repaid before 2020, need to consider whether they will be able to repay the outstanding amount and take action accordingly.

The Council of Mortgage Lenders and the Building Societies Association have agreed with the FCA to make sure that lenders get in contact with their borrowers in order to prompt them into checking that their plan for repayment is on track and considering the options available to them.

According to the FCA, this type of pre-emptive work is an example of the way the new regulator intends to act in the future, endeavouring to spot potential problem areas and prevent them from developing into bigger issues.

By acting now, in collaboration with the mortgage sector, the FCA is aiming to prevent interest-only borrowers defaulting on their loans in the future.

Over the next 30 years, some 2.6 million interest-only mortgages in the UK will become due for repayment. The FCA’s research indicates that around 90% of borrowers have a repayment strategy, such as a mortgage linked endowment policy. Despite this, just under half of all interest-only borrowers are modelled as likely to have a shortfall.

The FCA expressed concern that some borrowers are underestimating the problem, wrongly believing that they will have enough money to pay off their loan.

Among those who are set to repay their loan before 2020, a third of the shortfalls are expected to be over GBP50,000. Lenders will be contacting this group of borrowers first, if they have not done so already, because these are the people who have the least amount of time to find a solution.

The FCA said it believes that with careful planning, consideration and engagement with their lender, many interest-only borrowers – even those with loans maturing by 2020 – should be able to find a viable way to pay off their mortgage if they take control of the matter now.