U.K. Retail Sales Plunge

U.K. retail sales dropped by a record in March as accelerating inflation squeezed households’ finances and concerns about job cuts prompted consumers to cut back, the British Retail Consortium said.

Sales at stores measured by value fell 1.9 percent from a year earlier, partly due to the timing of Easter in 2010, the London-based BRC said in a report today. That’s the biggest drop since the series began in 1995 and compares with a 1.1 percent gain in February. On a like-for-like basis, which excludes new store openings, sales fell 3.5 percent, the most since 2005.

Helen Dickinson, head of retail at survey partner KPMG, said: "We have seen an emergence of new, lower spending patterns since the middle of January, which are
currently continuing to trend downwards.

"Many retailers will not be able to sustain this ongoing weakness in demand beyond the short-term and are hoping for some good news around the extended bank holiday period and a feel-good factor driven by the royal wedding."

Retailers including Mothercare, hmv and Currys and PC World parent Dixons Retail have issued a string of gloomy updates in recent weeks.

They are feeling the effects of wages failing to keep up with uncomfortably high inflation.

 

Update 13th April 2011

An increasing number of UK firms are showing signs of financial distress, a report suggests.

Corporate recovery experts Begbies Traynor have released their Red Flag Alert, which monitors a series of indicators of company cash woes.

'Impending redundancies'

The 15% rise in firms facing financial troubles was partly down to members of the public cutting discretionary spending, in the face of anticipated job losses.

The worst hit sector was in bars and restuarants, where firms facing difficult monetary issues had risen by 68% on the first quarter of 2010.

Meanwhile the leisure and culture, and sport and recreation sectors were faced a 60% and 23% rise respectively in firms facing tricky times compared to 12 months previously.

Professional services was another area hard hit, seeing a 61% hike in firms in trouble.

The Red Flag Alert report pointed out that a significant number of public sector staff "will have received formal notification of impending redundancies which will have had an impact on discretionary consumer spending".

Updated 14 April 2011

Debenhams has announced a rise in half-year profits and says it will resume dividend payments to shareholders.

Pre-tax profits for the six months to 26 February were £125.3m, up almost 10% from the £114.5m same period last year.

Debenhams added that the price of commodities such as cotton could be about to fall, helping both consumers and retailers.

Tuesday, 19 April 2011

The UK's biggest supermarket chain said record petrol prices and Government austerity measures had hit shoppers hard, but added that it had failed to keep up with the wider market in areas such as non-food.

Supermarket giant Tesco revealed a fourth-quarter sales slump today as it admitted it missed UK growth targets.

The group said UK like-for-like sales excluding VAT and fuel fell 0.7% in the three months to February 26 - leaving overall sales flat over the financial year as it struggled to combat tough consumer spending conditions.

UK general merchandise sales dropped 3.3% in the second half as it underperformed in clothing and electricals.

19 April 2011

Still, nobody should be predicting the demise of Tesco just yet. The company as a whole managed to boost underlying pre-tax profits by a whopping 12.3% to £3.8bn last year - which equates to more than £10m a day. Rather puts things in perspective, doesn't it? It also increased total sales by 8.1% to £67.6bn, driven partly by impressive 30% growth for its Asian operation.
So all things considered, Clarke probably doesn't have too much to worry about. OK, so the UK market is getting increasingly tough: shoppers are increasingly reluctant to splash the cash, and Tesco's rivals are raising their game all the time. But Tesco still accounts for about £3 of every £10 spent in the UK. And given its strong presence overseas, it's more cushioned than most from the effects of the UK slowdown.