Retail sales stable, but clothing remains flat

British retail sales stabilised in February, according to the CBI, the UK's premier business lobbying organisation. Retailers saw little change in sales volumes on a year ago in the first half of February, although they held up better than expected.

The CBI’s latest quarterly Distributive Trades Survey, which was conducted over the first two weeks of February, revealed that 34% of retailers reported an increase in their volume of sales in the year to February and 36% said they had seen a reduction. The resulting balance of -2% represents an improvement on last month’s survey (-22%) and exceeded expectations (-10%).

Similarly, the growth in the volume of orders placed upon suppliers was better than anticipated, although it remained weak (-4%).

Fortunes were mixed among retail sectors, and clothing retailers reported -41%, the lowest figure since March 2009 (-98%).

Price inflation in shops, although above the long-run average with a balance of +49%, is down from its peak a year ago (+73%), and at its lowest since late 2010 (+45%).

Looking ahead, retailers expect the volume of sales to remain broadly flat in March (+2%). However, retailers remain concerned about the longer term outlook. Sentiment about the general business situation over the next three months remained negative in February (-12%), for the fifth quarter in a row. Investment intentions for the year ahead are now at their lowest since February 2009 (-43%).

Judith McKenna, Chair of the CBI Distributive Trades Panel and ASDA Chief Operating Officer, said: “It’s good to see there are more positive signs on our high streets. But consumers are clearly continuing to focus their spending on day-to-day needs, rather than big ticket or luxury items.

“With disposable incomes under constant pressure, retailers remain concerned about the general business outlook for the rest of 2012.”

Image: High Street Fashion