Retailers caught in ‘perfect storm’

Retail sales suffered their steepest decline in two and a half years in September, as stores were forced to endure a “perfect storm” of unseasonably warm weather and economic gloom.

BDO, the professional services firm, said total retail sales from mid-sized stores open at least a year fell 4 per cent in September, the biggest slide since February 2009.

While homewares and non-fashion saw small like-for-like declines, the biggest hit was to fashion stores, where like-for-like sales fell 5.1 per cent, as soaring temperatures deterred shoppers from splashing out on coats and cardigans.

BDO’s High Street Sales Tracker – which analyses like-for-like sales at non-food stores with an annual turnover of £5m-£500m – said fashion retailers were put on the back foot by temperatures that nudged towards 30 degrees.

As well as economic malaise, and a dearth of promotions, retailers were also hit by comparisons with a strong September last year.

“Last year consumer confidence was higher, promotions came earlier and the weather played ball,” said Don Williams, head of retail at BDO.

The desolation on the high street was underlined last week by profit warnings from SuperGroup and Mothercare, while Tesco is estimated to have suffered its worst UK underlying sales performance for 20 years.

September and early October’s warm weather has proved a particular headache for store groups already suffering from cautious consumers reining in spending. John Lewis department stores reported a 9.5 per cent decline in total sales excluding VAT in the week to October 1. Sales fell at every John Lewis store open for more than a year.

The warm weather has also sparked concern about the performance at Marks and Spencer, for whom September is a crucial month. Last week the FT revealed that it had asked suppliers to contribute tens of millions of pounds to its store refurbishment programme, through a controversial levy on their turnover with M&S in the year to August.

But BDO’s Mr Williams offered some relief to store groups.

“While conditions on the high street are undoubtedly tough, consumer spending is unlikely to collapse completely between now and Christmas. We expect an element of “bounce back” now the temperature has dropped and the usual seasonal promotions are starting to appear,” he said.

Source : Andrea Felsted – FT.com
www.ft.com/cms/s/0/30265fe6-f289-11e0-931e-00144feab49a.html#axzz1aMpEqbEQ