Retail gloom deepens after dire August for the high street
Friday 26 August 2011
Trading conditions on the high street deteriorated to their worst levels for more than a year in the first half of August and retailers remain resolutely downbeat on the outlook for the sector, according to a survey from the Confederation of British Industry.
Further evidence of the dire summer suffered by most retailers was laid bare by Topps Tiles, the tiling specialist, which issued a profits warning yesterday after sales plummeted in the first seven weeks of its fourth quarter.
Far worse news came from Floors-2-Go, the laminate floor retailer, which collapsed into administration for the second time in three years yesterday. Its administrator, Senate Recovery, said that 53 stores had closed, with the loss of nearly 200 jobs, but 35 shops have been salvaged from the wreckage and are still trading under a newly formed acquisition vehicle.
Most retailers see few, if any, positive catalysts on the horizon for consumer spending – apart from a highly unlikely sharp fall in petrol prices, which have had a punishing impact on household budgets.
According to the CBI Distributive Trades Survey, 46 per cent of retailers suffered a fall in sales volumes between 28 July and 16 August, while 31 per cent posted a rise. The rounded negative balance of 14 per cent was worse than expected – and the poorest figure since May 2010. Judith McKenna, the chief operating officer of the Walmart-owned supermarket chain Asda, said: "As expected, August was a tough month on the high street. Sales volumes fell at a pace not seen in over a year, as consumers have continued to see their real incomes squeezed by a combination of inflation and weak wage growth."
Ms McKenna, who is also the chair of the CBI Distributive Trades Panel, said: "This survey suggests that prices will rise more slowly in the coming months, and savvy retailers will continue to offer consumers the lowest prices possible, but with energy and commodity costs still high, families' spending power looks like being constrained for some time."
The worst performers in August were retailers of clothing, specialist food and drinks, durable household goods and DIY products, as well as department stores. However, those selling grocery products, footwear and leather, sold more items. As did carpet dealers – perhaps surprisingly, given the pressure on big-ticket sales.
Indeed, retailers are the most downbeat they have been for a year and a half, with a balance of 11 per cent saying they felt more negative about trading over the next quarter than they did three months ago.
The UK riots, which kicked off in London on 6 August, have only added to the pressure endured by retailers. Richard Lowe, the head of retail and wholesale at Barclays Corporate, said: "As the pressures of inflation and rising utility bills continue to bear heavily on consumer spending, conditions remain difficult for retailers, and this month's riots are only likely to have exacerbated the situation."
He added: "We've already seen a number of retailers tapping into the key Christmas season with the earliest start to Christmas displays yet." Meanwhile, Topps Tiles blamed a "decline in consumer confidence" for its recent poor performance. While its like-for-like sales actually rose by 1.9 per cent in its third quarter, they tanked by 10.4 per cent in the seven weeks to 20 August. Topps said its full-year earning were "likely to be below" analyst expectations. Numis Securities lowered its forecast for Topps' pre-tax profits to £13m from consensus of £15.5m.
- 1 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 2 UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Warriors in ancient Iraq suffered Post-Traumatic Stress Disorder more than 3,000 years ago, say researchers
- 5 This crazy skiing video will leave you feeling queasy
Paris attacks: Do not call Charlie Hebdo killers 'terrorists', BBC says
Rowan Atkinson to sell £10 million McLaren 'supercar' he crashed into a tree and a lamppost
UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Warriors in ancient Iraq suffered Post-Traumatic Stress Disorder more than 3,000 years ago, say researchers
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
British Muslim school children suffering a backlash of abuse following Paris attacks
Greece elections: Syriza and EU on collision course after election win for left-wing party
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...