UK retailers report poor sales

UK retailers report poor sales

Hopes of a bumper Christmas for UK retailers were dealt a blow today after industry figures pointed to mixed trading in the festive run up.

Business lobby group CBI said sales so far in December were up for the third month in a row, but it added that the majority of British retailers still thought sales were poor for the time of year.

Fears were also raised by official figures from the Office for National Statistics (ONS) which showed an unexpected fall in November sales volumes - the first decline for six months.

There was no firm evidence in either release of shoppers rushing to bring forward purchases before the planned New Year reversal of the temporary reduction in VAT.

British retailers are also bracing themselves for flat sales in January, according to the CBI.

Its distributive trades survey found that the majority of respondents - 45% - said sales had risen in the year to December, with a net balance of 13% reporting an increase.

A balance of 16% said sales were bad for the time of year, while a net 13% expect sales to remain below seasonal par in January.

Today's figures from the ONS revealed a record drop in department store sales in November and poor performance in the clothing and footwear sectors.

This left sales volumes down 0.3% between October and November.

Most analysts had expected sales to rise by 0.6% last month.

However, last month's retail volumes were up 3.1% year-on-year and the ONS also revised up figures for October to show a sales rise of 0.6% on the month, increased from the 0.4% reported previously.

Howard Archer, chief economist at IHS Global Insight, said there was "increasing concern over consumer spending from the relapse in retail sales in November".

He pointed out that the CBI's survey was up against very weak trading a year earlier.

Vicky Redwood at Capital Economics said there was hope that the VAT rise would yet provide a boost to December figures.

"But this will just make for a weak January," she added.

Department store chain John Lewis remained upbeat despite the industry's uncertain outlook for festive sales.

It said sales rose 16% year-on-year between Sunday to Wednesday, coming after a 15% hike the week before.

However, figures also out today from Experian suggested fewer consumers have been hitting the shops as retailers have held-off from the widespread pre-Christmas discounting seen last year.

Its key "footfall" measure registered a drop of up to 4% so far this week compared with last year.

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