Retail sales defy gloom for third month running

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The Independent Online

Retailers have reported a third consecutive month of rising sales and expect the positive trend to continue in May, as shoppers carry on spending despite uncertainty about the outcome of the general election.

Star performers this month have been grocers, shoe shops and retailers of durable household goods, but clothing stores and furniture and carpet chains were less buoyant.

According to the latest Distributive Trades Survey by the Confederation of British Industry (CBI), a net balance of 13 per cent of retailers' sales volumes were higher in early April than in the same period a year ago, with 43 per cent reporting a sales increase and 30 per cent a fall. A net balance of 17 per cent of respondents expected year-on-year growth to continue next month.

Richard Lowe, a retail analyst at Barclays, said: "Following a volatile start to the year it is evident that the sector is beginning to settle, with continued modest growth.

"Indeed, for the moment sales appear to be resilient to the recently reported dip in consumer confidence." The rising sales figure in early April was unchanged from the net balance of 13 per cent in March. But it was lower than the buoyant net balance of 23 per cent in February, when retailers enjoyed a strong rebound after the heavy snowfalls in January.

Aside from January's lower sales, the last month in which more retailers reported falling sales than reported an increase was August 2009. This supports the view expressed last week by Sir Terry Leahy, the chief executive of Tesco, that the end of recession for Britain's shoppers came last summer and there will be no "double dip".

Sir Terry said: "The recovery has taken hold. UK customers came out of recession in summer of 2009 and these are not moments but long-term trends as world economies recover."

A net balance of 57 per cent of grocers told the CBI their sales had risen this month, followed by 54 per cent of footwear and leather chains, and 52 per cent of durable household goods retailers. The CBI poll was conducted between 24 March and 14 April.

Despite warning that the economy was still "in a fragile place", the chief operating officer of Asda, Andy Clarke, said: "Spring has landed on the high street with some modest but welcome sales growth, and that improvement is expected to carry on into early May. Grocers and shoe shops fared reasonably well in April, and the lift in the housing market seems to have fed through to sales of white goods and furniture."

The CBI said a net balance of just 12 per cent of furniture and carpet retailers saw sales growing in early April, while only 7 per cent of clothing chains reported a rise.

Mr Lowe added: "With rising unemployment and increasing inflationary pressure on household incomes, retailers will be keeping a close eye on confidence figures over the coming months, particularly with weaker than expected clothing figures."

Of all the sub-sectors, chemists were the worst performers, with a net balance of 47 per cent suffering a fall in sales. While a balance of 1 per cent of hardware, china and DIY stores in negative territory, it was the best performance since May last year.