Fears as retail sales slide

THE UK's leading retailers last month registered their first collective fall in like-for-like sales for nearly two years, the British Retail Consortium said yesterday.

THE UK's leading retailers last month registered their first collective fall in like-for-like sales for nearly two years, the British Retail Consortium said yesterday.

The 1.6% fall sales, which slashed growth for the first quarter of 2008 to just 0.8%, came despite the usually busy Easter period falling during March, rather than in April as happened last year.

The decline was the worst since July 2005, although the gloom was tempered by more upbeat reports from some individual retailers.

Supermarket Tesco giant rang up annual profits of £2.85billion, underpinned by 3.5% growth in like-for-like sales, and fashion house Burberry said demand for luxury goods from oil-rich customers in Texas and Middle East had resulted in second half like-for-like sales up 6%.

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However, this compared with 11% growth during the first half of the year, and updates from other retailers also indicated a slowing trend.

John David Group, owner of JD Sports, said its pre-tax profits had more than doubled to £35million, on the back of an 11% increase in like-for-like sales - well ahead of rivals JJB Sports and Sport Direct - but still warned that “a note of prudence” was required in its outlook for the rest of this year.

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Department store chain Debenhams said it was satisfied with its first-half sales performance - despite a 12% fall in profits to £94.1 million - with like-for-like sales for the past 32 weeks down 1%, compared with a drop of 0.7% in the 26 weeks to March 1.

The firm added that it had taken market share from rivals in the clothing sector but warned that it expected the environment to remain challenging.

Away from the high street, Carphone Warehouse disappointed the City after revealing that had it secured fewer-than-expected broadband connections at the start of this year.

The TalkTalk operator said its internet customer base rose to 2.7 million, following 109,000 broadband additions in the quarter to the end of March - short of consensus market forecasts for an improvement of around 128,000, as well as down on the 118,000 seen in the previous quarter.

Shares fell 7% following the update, even though Carphone reported a 12% rise in mobile connections at its retail arm and said it was on track for pre-tax profits of between £215 million and £220 million in the year to March 31.

Across the retail sector as a whole, the BRC said that food sales had slowed after two strong months and clothing and footwear were the worst for at least eight years. Homewares and furniture also fell further, despite continued discounting and promotions.

Stephen Robertson, BRC director general, said: “This is the first year-on-year fall in like-for-like sales for two years and the worst result for nearly three years.

“Here is the strongest evidence yet that customers are making serious economies and are increasingly concerned about the future. With recent retail profit warnings, it is further proof that trading is extremely tough but retailers are fighting back by keeping prices low and delivering extra value.

“Hard-up customers and dreadful Easter weather conspired to dampen demand for DIY and gardening retailers and those selling clothing, footwear and big-ticket items such as domestic appliances and furniture but almost every sector except food saw sales down on a year ago. It's clear customers are concentrating on essentials.”

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