Vat hike and poor sentiment blamed as sales fall for 12th consecutive quarter

Retail sales fell for the 12th consecutive quarter in the first three months of 2012, although a pick-up was evident in March.

New figures published yesterday by Retail Excellence Ireland (REI) showed that sales fell by an average of 2.56%, year-on-year, during the first quarter Taking the three months individually, January saw the biggest fall — sales down by over 4.7% year-on-year — while February saw a slight improvement, with a 1.68% year-on-year fall recorded.

Retail sales were up by just over 0.7%, year-on-year in March.

March — aided by a spell of good weather — marked only the second annualised monthly increase since 2008.

According to David Fitzsimons, chief executive of REI: “The 2% Vat increase to 23% has made retailing difficult and makes it hard to achieve last year’s targets. Constant negative media commentary surrounding household charges and water charges is worsening consumer sentiment.”

Mr Fitzsimons said the “unwillingness” of Nama to apply “meaningful rent reductions to a significant cohort of tenants has further exasperated the rent crisis”.

Rent costs as a percentage of sales stood at 12.7% in the first quarter of this year, up from 12.2% in the corresponding period last year.

Hot beverages — basically coffee shop sales — and pharmaceutical goods performed best in terms of sales during the period, but sales of so-called “big ticket” items continued to suffer. The worst performing sector was furniture and flooring, sales of which fell by nearly 10% on a year-on-year basis during the quarter.

“While both the premium and value ends of the market are performing reasonably, the middle market remains highly competitive with future failure anticipated,” he said.

Neutral commentators seem to agree with that prognosis. In a research note on consumer spending, Bloxham Stockbrokers said it had already anticipated March’s 2%+ decline in sales.

“In our view, personal spending on goods and services will fall for the fifth year running in 2012, putting more retailers and service providers out of business as a result,” it added.