Wednesday lunchtime business bulletin

Sep 24 2008 By Andrew Mernin

Retail sales fell for the sixth time in a row this month but improved on August, a CBI survey said today.

The business group’s distributive trades survey showed a balance of 27% of firms reporting weaker sales volumes than a year ago.

It was better than the 42% expected, and a marked improvement on August’s 46% reading - the worst in the survey’s 25-year history.

Supermarkets looked to be weathering the downturn, with a balance of 37% of grocers reporting sales growth.

But sectors linked to the ailing housing market continued to suffer, with 62% of furniture retailers reporting worse sales, and 84% of household goods suppliers.

CBI deputy director general John Cridland said: "Sadly, there has been no Indian summer after the sales washout of August, and the retail outlook for early autumn remains bleak."

A £12.5bn takeover of British Energy powered the nuclear power firm’s shares forward in the FTSE 100 Index today.

The improved 774p a share offer from France’s EDF finally sealed the on-off deal and sent BE more than 6%, or 44p higher to 768p.

The wider FTSE 100 Index edged into positive territory by mid morning - up 7.3 points to 5143.5 - as better sentiment around bank shares lifted many players in the sector.

Uncertainty over the US Government’s banking bail-out plans led to overnight falls on Wall Street, but traders took some cheer from news of billionaire Warren Buffett’s five billion US dollar (£2.7bn) investment in Goldman Sachs.

In London, British gas parent Centrica, in talks over taking a 25% stake in BE, saw early gains but shares later dropped 1.25p to 329.5p as the stock turned ex-dividend - meaning shareholders are not entitled to the latest payout.

The Co-operative Group today said it was ready to trade blows with its bigger grocery rivals after its burgeoning food business boosted first-half profits.

The UK’s largest mutual retailer has embarked on a three-year brand and store overhaul and will consolidate its position as the country’s fifth-biggest grocer if its £1.6bn Somerfield takeover is approved.

The Co-op’s food business boosted trading profits by 68% to £126m in the 28 weeks to July 26, helping the mutual lift overall profits by 36% to £191.2m.

Like-for-like food sales were 5% higher - ahead of the market - with overall sales leaping 43% to £2.4bn as customers flocked to revamped stores.

The Co-op has seen 11 successive quarters of like-for-like growth and the Somerfield deal would give the Co-op an 8% share of the grocery market.

The pound at noon was US$1.8548 compared to US$1.8544 at the previous close while the euro at noon was £0.7900  compared to £0.7937 at the previous close.