High Street sales fall for second month

Source : Retail Bulletin

The volume of sales on the high street fell again in June, compared with a year ago, according to the latest CBI Distributive Trades Survey

But the decline was slower than expected and than last month, and retailers are hopeful that sales will pick up in July, partly because of the impact of the World Cup.

More than a third of retailers surveyed (34%) reported a rise in the volume of sales during the first two weeks of June, compared to the same time a year ago, while 39% reported a fall. The resulting balance of -5% is better than had been predicted (-15%), and an improvement on May’s unexpectedly weak balance of -18%.

The three-month moving average of sales volumes was marginally negative (-3%), after staying positive for seven months in a row, and a net 11% of retailers described sales as poor for the time of year, similar to the results for April and May.

The decline in sales was led by footwear & leather, which saw a sharp fall in sales after eleven months of solid growth, followed by hardware, china and DIY.

Looking ahead to next month, sales are expected to recover some ground, with a balance of 11% expecting volumes to be higher than a year ago. However, a net 8% of retailers still expect sales to be poor for the time of year.

Ian McCafferty, CBI Chief Economic Adviser, said:“High street sales weakened slightly this month after a mixed performance across the sector. Footwear and leather goods retailers were the worst hit, but grocers and durable household goods enjoyed solid growth. This may reflect consumers gearing up for the World Cup by stocking up on food, drink and new televisions.

“Retailers are hopeful that sales will strengthen next month. As the survey pre-dates the emergency Budget, news that the feared rise in VAT will not take effect until next January may well also encourage some advance spending over the second half of the year.”

The volume of orders placed on suppliers fell slightly (-7%) but a balance of 11% expect orders to grow next month. A net 17% of retailers said that stock levels were more than adequate relative to expected demand, the highest balance since last April (+22%) and broadly in line with the long-run average (+18%). A balance of +11% of retailers expect to have sufficient stocks in July.