High Street clothing sales take a battering as Indian summer leaves coats on rails at Marks & Spencer and Next
Clothing sales at Marks & Spencer and Next look set to be the latest casualty of the Indian summer as new data shows a record low in High Street fashion.
Footwear and clothing were the worst performing categories in September, according to the BRC-KPMG retail sales monitor.
It reports today record declines since April 2012 and March 2013 respectively, casting a pall of gloom over the embattled clothing retailers.
Fashion faux pas: The warm September weather, which has prompted shoppers to delay buying winter coats and boots
Marc Bolland, chief executive of Marks & Spencer, has been under intense pressure to show a raft of initiatives have kick-started growth in his troubled clothing arm.
The warm September weather, which has prompted shoppers to delay buying winter coats and boots, will not be a welcome development.
Lord Wolfson, chief executive of Next, widely seen as the strongest performer on the High Street, has already warned sales are below expectations.
David McCorquodale, head of retail at KPMG, said: ‘After a bumper summer, this is a disappointing outcome for retailers and has undoubtedly reversed some of the sales gains made in August.
‘However, if temperatures drop to a more seasonal level this cooler weather will quickly turnaround retailers’ fortunes and help them to sell their autumn-winter ranges.’
M&S shares fell 3.2p yesterday, closing at 383.9p, while Next dropped 50p to 6390p.
Overall UK retail sales were down 2.1 per cent on an underlying basis from September 2013. On a total basis, sales were down 0.8 per cent, against a 2.4 per cent rise in September 2013.
This is the weakest performance since December 2008.
Helen Dickinson, director general of the British Retail Consortium, said the disappointing data ‘can be attributed to a number of factors including the continuing decline in food sales’.
Supermarkets have been embroiled in a costly price war as the Big Four battle to win back customers from the German discounters Aldi and Lidl.
Official figures published today are likely to show the impact of lower grocery prices on living costs with inflation set to fall to a new five-year low.
The Office for National Statistics is expected to report that the consumer prices index measure of inflation dipped from 1.5 per cent in August to 1.4 per cent in September.
That would be the ninth month in a row that inflation has been below the 2pc target – giving the Bank of England more space to leave interest rates at record lows.
Rates have been frozen at 0.5pc since March 2009 but Governor Mark Carney has warned that an increase is ‘getting closer’.
It is thought the Bank will raise rates early next year, although weak wage growth could persuade members of the monetary policy committee to wait even longer.
Howard Archer, chief UK and European economist at IHS Global Insight, said inflation is likely to have fallen to 1.4 per cent last month.
‘There is a realistic possibility that inflation could have fallen back even further given lower petrol prices and food prices being held down by the ongoing supermarket pricing war,’ he added.
‘This is good news for consumers’ purchasing power and gives the Bank of England extra scope to hold off from raising interest rates in the near term if it is worried about downside risks to growth or ongoing weak pay.
‘However, earnings growth is likely to have seen only a modest pick-up in August, thereby remaining a constraint on consumers.’
Scotiabank’s Alan Clarke expects inflation to have remained stable at 1.5 per cent in September but said it would be the ‘calm before the storm’ with CPI heading towards 1 per cent in December.
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