Retail gloom deepens after dire August for the high street

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.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower