10-07-2007
Positive retailer trading statements at all time low
Interest rate increases are finally beginning to make themselves felt in the retail sector, according to a Grant Thornton survey of retail trading statements.
A review of the statements issued on the London Stock Exchange (LSE) during Q2 revealed that the number of positive trading statements issued had plummeted to lows not seen for nearly two years. The number of negative statements also increased.
While food retailers continue to enjoy a steady performance, with every food retailer on the LSE reporting an increase in like-for-like and total sales during the quarter, non-food retailers were not as lucky.
Sectors such as music, clothing and consumer electronics saw a fall in the increase of like-for-like and total sales with profit warnings at similar levels to the previous quarter.
Grant Thornton reports that in total sales fell to 78% of all retailers, down from 85% in the previous quarter, while like-for-like sales fell to 65% from 74%.
David Bush, head of Grant Thornton’s Retail Services team, said “This is clear evidence that May’s interest rate rise has begun to have an impact along with the cumulative impact of the other rate rises since last summer.”
With yet another rate increase in July and potentially more to come, retailers are bracing themselves for the worst in the next quarterly reports.