Britons may already be strapped for cash but they won't feel the full force of the country's cost of living crisis until the autumn, the boss of clothing and food retailer Marks & Spencer said on Wednesday (May 25).
M&S chief executive Steve Rowe said many Britons will spend on the Platinum Jubilee celebrations and then possibly enjoy their first foreign holiday since the pandemic began, before the reality of a massive jump in energy bills hits them in September and prompts them to adjust their spending.
"Somewhere between I think the autumn/October period and January, we'll start to see it bite," Rowe told reporters after M&S reported annual results.
"Those on lower incomes will see it bite earlier perhaps than our customers, where they tend to have a little bit more in the bank and a little bit more savings," said Rowe, who stepped down as chief executive on Wednesday.
Other firms have flagged similar warnings in recent days. The owner of British restaurant chain Wagamama on Tuesday projected food and drink inflation to reach 9-10 per cent this year, nearly double its estimate from two months ago.
British consumers are facing the biggest squeeze on disposable income since at least the 1950s. They were hit last month by a double whammy of surging household energy costs and higher taxes.
On Tuesday, the UK energy regulator warned household energy bills could surge by another 40 per cent in October, from the current £1,971 cap announced in April, which was itself a more than 50 per cent rise on the previous level.
Market researcher Kantar has said over one-fifth of UK households describe themselves as "struggling" to make ends meet, piling pressure on the government to do more to help the poorest.
Chancellor Rishi Sunak today announced an energy bill discount of £400 this autumn for every household in the UK as part of a package of new measures to tackle soaring prices.
M&S finance chief Eoin Tonge said M&S's selling price food inflation was running at about 6 per cent. Rowe said the clothing and home business would see price rises during the autumn and summer, as the higher cost of raw materials is passed on to consumers.
Rowe said changes pushed through in the last few years meant M&S was in a stronger position to ride the crisis.
"The key thing here is to trade the business, and we're in much better shape," he said.
Rowe will be succeeded by a new joint CEO team of current M&S executives Stuart Machin and Katie Bickerstaffe.
Russia exit
M&S on Wednesday also announced a full exit from Russia following the country's invasion of Ukraine.
After halting product shipments to Russia at the start of March, the retailer said it had decided "to fully exit" its Russian franchise run by Turkish conglomerate Fiba Group.
The exit, plus disruption to M&S operations in Ukraine run also by franchisee Fiba, is costing the company £31 million.
"Unfortunately, our Ukrainian business has also been partially closed as a result of war impacts, and we are working with our partner to reopen as and when possible," the company added in a statement.
Its exit from Russia comes also after M&S last year shut more than half its stores in France as Brexit affected supplies of fresh and chilled products.
M&S on Wednesday said it had taken a charge of £10.3 million following the French shakeup.
It had blamed the move on "supply chain complexities" following Britain's formal exit from the European Union at the start of 2021.
M&S on Wednesday added that the group swung back into profit during its last financial year, or 12 months to the start of April. It was heavily boosted by strong sales online in Britain and abroad.
Ahead, M&S pointed to "difficult and unpredictable headwinds" owing to ongoing fallout from the pandemic in addition to geopolitical and economic uncertainties.
