Dismal weather piles pressure on UK retailers as sales decline

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

Sales volumes contracted by 0.5% compared with April, according to the Office for National Statistics (ONS).

Overall, sales are 2.3% higher year-on-year – and some economists fear weaker consumer spending in both April and May could inflict worse-than-expected damage on UK economic growth during the second quarter.

June’s weather so far has been wetter than average, with shoppers delaying purchases of summer clothes.

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 that Bathstore was on the verge of collapse and that fashion chain Monsoon Accessorize was offering landlords profit-share in exchange for 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.

Rhian Murphy, the ONS head of retail sales, 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 being blamed, in some quarters, on Brexit and continuing political uncertainty.

That is because record employment levels and the fact prices are 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 for UK output 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.”

(c) Sky News 2019: Dismal weather piles pressure on UK retailers as sales decline