Supermarket stocks were the worst performers in London on Friday afternoon as the category continued to extend losses heading into the weekend.
The FTSE 350 UK retail sector has lost 4.3% of its value over the last five days as the wider stock market pulled back from coming close to a multi-year high last week.
Grocery names such as Wm Morrison and Tesco have fallen sharply over the last week, down 6.8% and 4.7% respectively, in the aftermath of data which showed that UK food price inflation was weak last month.
The British Retail Consortium (BRC) said prices in shops fell 1.8% last month compared to a year ago, the biggest drop in prices since 2006. Non-food prices dropped a record 3.4% while food prices increased by 0.6%, the smallest gain on record. BRC Director General Helen Dickinson said fierce competition among grocers had brought food price inflation down to record-low levels.
Meanwhile, industry figures this week from Kantar Worldpanel showed that Morrisons and Tesco both saw market share contract in the 12 weeks to June 22nd as they continued to feel the heat from rival discount chains such as Aldi and Lidl. Morrisons and Tesco were trading 2.2% and 1.3% lower today respectively.
J Sainsbury, whose shares
have fared a little better this week down just 2.4% (-0.2% today), was found to have grown market share slightly during the 12-week period, Kantar said.
Meanwhile, investors in Tesco were continuing to react to the news that the supermarket has poached Marks & Spencer's Chief Financial Officer Alan Stewart as its new Finance Director. The FTSE 100 grocer has been looking for a new Finance Chief since Laurie Mcllwee announced his plans to retire in April.
The move was branded by City commentators as "out of the frying pan into the fire" with both companies under pressure from shareholders unhappy with their performance.
Retail Consultant Nick Bubb said in an e-mail: "Despite his promotion last week (to also take on the M&S Property role), it's easy to see why FD Alan Stewart wants to jump ship, given the gloomy outlook for M&S, and his sudden departure is therefore a telling blow to the M&S recovery story. Why he thinks that even the beleaguered Tesco is a better story than M&S is a more interesting question."
Top performing sectors so far today
Forestry & Paper 11,051.41 +1.58%
Industrial Metals & Mining 1,224.18 +1.53%
Fixed Line Telecommunications 4,411.24 +1.09%
Automobiles & Parts 8,272.08 +1.00%
Construction & Materials 4,086.57 +0.83%
Bottom performing sectors so far today
Food & Drug Retailers 3,579.54 -1.08%
Mining 17,015.80 -0.82%
General Industrials 4,050.27 -0.53%
Aerospace and Defence 4,829.65 -0.34%
Beverages 13,988.52 -0.31%