February retail sales better than feared

Retail sales fell heavily year-to-date but not as weak as last survey; Jobs lost at a record rate, the CBI said today.
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Despite the economic situation, the latest sales figures were not as poor as retailers had feared. In the CBI's latest Distributive Trades Survey, 27 per cent of retailers said year-on-year sales volumes rose in the first half of February, while 52 per cent said they were down.

The resulting balance of -25 per cent marked a fall in sales, but was not as severe as January (-47 per cent) and was significantly better than expected (-52 per cent). The decline in sales is expected to worsen slightly in March (-33 per cent).

Sales for the time of year were reported to be poor by a net 39 per cent of retailers, and are set to remain at a similar, below-average rate in March. The three-month moving average of sales volumes, which levels out monthly peaks and troughs, remained weak with a balance of -42 per cent.

Suppliers’ orders mirrored the movement in sales, falling over the year to February (a balance of -31 per cent), but at a slower pace than January. A balance of 19 per cent of firms said stock levels are more than adequate to meet expected demand, which was the same balance as in January.

The quarterly questions showed employment conditions worsened sharply over the year and a balance of 49 per cent of retailers said they had laid off staff, which was the lowest since the quarterly survey began in August 1983. A similar record rate (a balance of -45 per cent) of employment reduction is expected for March.

A balance of 38 per cent of retailers reported increases in average selling prices over the year to February, and a slight easing in this rate is expected in March (+35 per cent).

Retailers' confidence in their sector remains low, with a balance of 26 per cent expecting the situation to worsen over the next quarter. Investment intentions remain very weak (a balance of -44 per cent) but are not as bleak as November (-57 per cent).

Andy Clarke, chairman of the CBI Distributive Trades Panel, and chief operating officer of Asda, said:

"February was another tough month and sadly many retailers are cutting jobs as shoppers stay away and the recession deepens. But conditions were not quite as harsh as they were last month and in the run up to Christmas.

"Supermarkets and footwear and leather shops enjoyed some pretty strong growth, proving that, as the flight to the value end of the market continues, those with the right offering can fare well during these tough times.

"March looks similarly testing but we hope that, as the year goes on, lower interest rates and falling inflation will encourage a pick-up in spending."

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