Retail sales slow in July as hot weather keeps consumers away from the high street

14-08-2018

Despite the struggles on the high street, fashion retailer, New Look said its womenswear ranges outperformed the UK market by 7.4 percentage points in the first quarter

Retail sales slow in July as hot weather keeps consumers away from the high street

The hot weather kept customers away from the high street in July but boosted food and drinks sales, according to industry data.

The British Retail Consortium-KPMG Retail Sales Monitor showed total retail sales in July grew at an annualised rate of 0.5% on a like-for-like basis. That compares to a growth of 1.1% in June, when the World Cup and warm weather buoyed food, drink and TV sales.

In July, the heatwave continued to encourage more consumers to buy drinks and food for barbecues as well as fans and cooling equipment. However, sales of furniture, computing and footwear declined.

"Last month's sweltering temperatures kept shoppers focused on eating, drinking and keeping cool,” said BRC chief executive Helen Dickinson.

"Food sales had their best July in five years, while fans and cooling equipment flew off the shelves.”

Dickinson added: "Sales of non-food products struggled, three months into an extended period of summer weather, demand for many seasonal purchases has slowed while the heat has kept shoppers away from days spent browsing new ranges.”

New Look earnings stabilise

Despite the struggles on the high street, fashion retailer, New Look said its womenswear ranges outperformed the UK market by 7.4 percentage points in the first quarter, according to BRC figures.

While revenue fell 2.7% to £329.4mln and like-for-like sales dropped 4%, earnings improved in the quarter following a review of the business.

Adjusted earnings (EBITDA) rose 1.5% to £27.6mln in the first three months to June 23 and underlying operating profit increased 19% to £14.4mln.

New Look has been carrying out a turnaround plan that involves shutting down 60 of its stores in response to the growing consumer shift toward online shopping.

The retailer used the company voluntary arrangement (CVA), an insolvency process that allows an organisation to shut stores and negotiate lower rents on remaining stores to pay creditors.

“As we recover the broad appeal of our product, we were pleased to improve our market performance and deliver better customer conversion rates,” said Alistair McGeorge, executive chairman.

“Our turnaround plans continue, and we will deliver further operational efficiencies whilst maintaining our resolute focus on our core strengths and heartland customer to ensure we remain on the right track.”

Pandora issues profit warning

Meanwhile, jewellery maker Pandora has become a victim of the tough retail market as it issued a profit warning and announced plans to cut almost 400 jobs.

The company lowered its sales and profit margin guidance for this year after both fell in the second quarter.

Earlier this year, the group warned of weaker margins due to lower footfall at stores in the US and the UK, a lack of new products and lower prices in China.

Source: Proactive Investors