Lasting recovery on the high street remains elusive

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The Independent Online

The pain suffered by the retail sector in the first quarter was laid bare yesterday, as the CBI retail data hinted that trading conditions are improving on the high street.

The accountancy firm Deloitte said that retail administrations soared by 102 per cent to 113 in the first three months of 2009, compared with 56 in the same period last year. The increase in retailers collapsing in the first quarter was higher than other sectors, as store groups bear the brunt of the consumer recession.

Deloitte's survey came as Carpetright, the UK's largest floor coverings retailer, posted tumbling underlying sales, down by 15.1 per cent at its UK and Republic of Ireland stores for the 25 weeks to 25 April.

Lee Manning, the partner in reorganisation services at Deloitte, warned that retailers are not yet out of the woods. He said: "Economic uncertainty is causing consumers to hold back, pay off their debts and prepare themselves for the worst; discretionary spend is therefore being cut back." In the first quarter, the furniture retailer Land of Leather collapsed, and last week the fashion chain Bay Trading appointed Deloitte as administrator.

A total of 922 UK companies across all sectors appointed administrators in the first three months of this year, which was 20 per cent more than in the first quarter of 2008, according to Deloitte. Collapses in the hospitality and leisure sector rose by one fifth.

Yesterday, Carpetright, which has 693 stores in Europe, posted group sales down by 6.7 per cent over the 25-week period. It said the depreciation of sterling against the euro would reduce its gross margin by 100 basis points in the second half.

On a more positive note, Dunelm, the out-of-town homewares retailer, yesterday posted a 2.3 per cent rise in like-for-like sales in the 17 weeks to 25 April.

The grocery sector delivered more positive news, with the industry growing by 6.2 per cent for the 12 weeks to 19 April, according to TNS Worldpanel. J Sainsbury reinforced its recent momentum by posting a 8.1 per cent rise in sales over the period – ahead of its big three rivals, Asda, Tesco and Morrisons, for the first time since October 2007.

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