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Dismal weather piles pressure on UK retailers as sales decline | Business News



The biggest monthly drop in fashion sales in almost four years is being blamed on poor weather during May.

The Office for National Statistics (ONS) charted the worst performance for the sector this year in the month – with sales volumes contracting by 0.5% compared to April.

It left sales 2.3% higher year-on-year and economists pondering whether weaker consumer spending in both April and May would inflict worse-than-expected damage on UK economic growth during the second quarter.

The weather during June to date has been wetter than average at a time when retailers are already battling weaker consumer confidence and juggling higher costs from things such as business rates and rents.

A string of big names have sought rescue deals this year – with Sir Philip Green’s Topshop empire among the latest to go cap in hand to its creditors and secure backing.

Sky News revealed on Wednesday how Bathstore was on the verge of collapse and that fashion chain Monsoon Accessorize was offering landlords profit-share in exchange for rescue support.

The ONS said clothing and footwear sales during May were 4.5% lower than in the previous month – the biggest drop since July 2015.

Its head of retail sales Rhian Murphy, said: “Retail sales continued to grow in the latest three months despite two consecutive monthly falls, with clothing sales declining considerably in May, due to unseasonably cold weather.

“We see quite a mixed picture across the rest of the sector as the decline in department store sales continued, with no growth since September of last year.”

Consumer spending woes are blamed in some quarters on continuing Brexit uncertainty as economists say record employment levels and prices rising at a weaker pace than wages usually support the high street.

Howard Archer, chief economic adviser to the EY ITEM Club, said he feared UK output may have been found to have contracted in the second quarter.

He wrote: “Following very strong retail sales through the first quarter, consumers were always likely to take a breather in the second quarter.

May’s 0.5% dip in retail sales volumes follows a marginal fall of 0.1% in April. This reinforces belief that the economy is headed for a sharply weakened performance in the second quarter after consumers played a leading role in first-quarter GDP growth of 0.5% quarter-on-quarter.

“Indeed, we suspect that GDP may well contract slightly in the second quarter. May seems to have been a very challenging month for the economy after GDP contracted 0.4% month-on-month in April (when the manufacturing sector was hit hard by car producers bringing forward their summer shutdowns while there was some initial payback for the stockpiling that occurred in the first quarter amid heightened Brexit uncertainties).

“Consumers have undeniably been resilient so far this year – clearly helped by improved purchasing power and elevated employment – and have seemingly so far largely brushed off Brexit concerns.

“Nevertheless, May’s second successive and larger dip in retail sales fuels suspicion that consumers could become more cautious and limit their spending over the coming months as a consequence of a highly uncertain domestic economic and political environment amid prolonged Brexit uncertainties.”

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