A far from Merry Christmas in High Street

08 Jan '08

4 min read

UK retail sales rose only 0.3% on a like-for-like basis, compared with December 2006, when sales were up 2.5%. December's growth was the weakest since the decline in March 2006 when sales were hit by Easter falling in April in 2006. It was the worst December figure since 2004.

The three-month trend rate of growth fell to 0.8% from 1.8% in November for like-for-like sales, and to 2.8% from 3.8% for total sales, reflecting the continuing growth of retail space.

Kevin Hawkins, Director General, British Retail Consortium:
“This result is somewhat worse than we expected and points to a very challenging first half for 2008.

Given that the full effects of the Bank's previous increases in interest rates have yet to be felt by many households, retailers and manufacturers alike need a rate cut now – preferably a full half-point.”

Helen Dickinson, Head of Retail, KPMG:
"Sales did grow in December but, as the worst performance since March 2006, growth can only be described as weak. In the lead-up to Christmas there were huge daily swings as shoppers replaced even spending patterns with a smaller number of bargain-hunting 'big swoops'.

Sector performance also varied. Clothing and footwear sales actually fell in December for a third consecutive month, while food and drink, and toiletries and cosmetics grew.

"This sets the scene for the new year ahead and like-for-like sales look set to move into negative territory as theydid in 2005. This does not bode well for retailers struggling with rises in their cost bases of around four per cent."

Clothing:
Sales were below their year-earlier level for the third consecutive month. Although the decline was slightly smaller than in November and October, much of the improvement was driven by aggressive discounting, special sales days and an earlier start to some clearance sales.

As in November, womenswear suffered more than men's and childrenswear. Designer ranges continued to outperform and value lines often held up better than mid-market.

Outerwear, knitwear and nightwear did better on colder days but sales were often dependent on heavy markdowns. Cashmere, partywear and fashion accessories achieved some growth around Christmas.

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