UK high street gloom continues

Consumer spending deteriorated in March, leading to a fall in sales at mid-market retailers, according to BDO, the professional services firm.

Don Williams, head of retail at BDO, said: “It was a little ugly, but it wasn’t as ugly as it could have been.”

BDO’s High Street Sales Tracker, which analyses sales at non-food stores open at least a year with an annual turnover of £5m-£500m ($8m-$800m), showed like-for-like sales falling 1.2 per cent in the five weeks to April 3, the worst performance of any month since January 2010. BDO said mid-market retailers were hit by the timing of Easter, as well as deteriorating consumer sentiment.

Fashion sales held up best, with a decline of 0.8 per cent from stores open at least a year.

Mr Williams said some fashion stores were using promotions to tempt shoppers over the threshold, while the recent warmer weather had also helped.

Non-fashion, like-for-like sales fell 1.7 per cent. However, it was homeware sales that showed the biggest decline, slipping 2.7 per cent, as consumers cut back on large purchases. Mr Williams said this reflected the continued impact of the VAT rise on January 4, which encouraged shoppers to spend before the increase.

“What we have seen in previous periods when you have a VAT increase is a drag forward of demand on big items, which lasts three to four months. We would hope that would start to unwind a bit in late April or May,” he said.

BDO’s figures, which follow on from an “ugly” February for retailers, come after several profit warnings and downgrades from store groups over the past few months.

Consumers are being hit by a combination of rising energy bills and petrol prices, higher taxes and the prospect of public sector job cuts.

Source : Andrea Felsted - FT.com