UK retailers post worst sales drop since financial crisis

SEP 4, 20159:06 PM

[LONDON] British retailers had their biggest sales decline since 2008 last month as wet weather kept shoppers at home and tourist spending slowed.

Comparable sales in stores dropped 4.3 per cent, falling a fourth consecutive month, business advisory firm BDO said in its monthly report. The decline was led by a 5.5 per cent slump in sales at fashion retailers.

The figures make "sobering reading," Nick Bubb, an independent retail analyst, said by e-mail. BDO's fashion survey only covered "relatively upmarket" retailers, and was not representative of the mass market, he said.

Despite a recovering economy, only 47 pence of every extra pound in the pockets of UK consumers is going through the tills of retailers, with an increasing amount being spent on leisure activities and holidays, Exane BNP Paribas said in a research note Thursday.

Next Plc, Dixons Carphone Plc, Sports Direct International Plc and Home Retail Group Plc are all scheduled to report results next week. Next shares fell 3.6 per cent as of 1:04 pm in London, with Dixons Carphone shares down 2.9 per cent.

The strength of sterling means Britons are spending more on their holidays than at home. In the UK the reverse is true, with the strength of the pound meaning tourists have been more frugal, BDO said.

Summer rainfall levels in the UK were about 13 per cent more than the long-term average, the Met Office said last week, a factor that the management of Halfords Group Plc said this week was behind an 11 per cent drop in cycling sales.

BDO's monthly report covers the four weeks to August 30, meaning any extra consumer spending on the UK's summer public holiday, which was on August 31, will be reflected next month. The sales tracker surveys about 85 mid-tier retailers and includes a total of about 10,000 individual stores.

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