August turned out to be the worst month for Britain’s retailers since the financial crisis of 2008, a survey has shown, as poor weather and a spike in foreign holidays kept shoppers away from the high street.
Retail sales fell by 4.3% on the year before, according to the monthly high street sales tracker from accountancy firm BDO. This was the biggest drop since November 2008 and the sixth monthly fall this year.
The John Lewis department store chain, seen as a barometer of the high street, reported a 3% drop in August sales year on year. Sales were down 3.4% in the latest week to 29 August. Fashion sales slipped 0.9%, electricals and home technology suffered a 9.3% fall and homewares were down 0.4%.
Paula Nickolds, buying and brand director at John Lewis, said: “A tough trading period closed with another difficult week, but with definite signs in the run-up to the bank holiday weekend that there is plenty of pent-up demand for us to target in September.”
Cantor Fitzgerald analyst Freddie George noted this was a key week for the sector, before children go back to school and when consumers start to shop for their autumn wardrobes. “These figures are thus in our view very disappointing probably impacted by consumers, particularly those based in the south, choosing to take holidays.”
The figures come a day after the closely watched monthly Markit survey showedBritain’s dominant services sector growing at its slowest rate for two years in August, pointing to slower economic growth in the third quarter.
BDO said all retail sectors disappointed in August, with fashion sales down 5.5%, homewares falling by 3.3% and lifestyle goods slipping by 1.3%. While non-store sales rose by 11.4% year on year, this was the slowest growth ever recorded for online sales by BDO.
Sophie Michael, the head of retail and wholesale at BDO, said: “The high street was losing out as UK consumers opted to spend their disposable income on leisure pursuits, eating out and holidays. The strength of the pound has encouraged Brits to spend more abroad rather than in the UK.”
Earlier this week, car parts and bicycle retailer Halfords blamed the wet weatherin August for a sharp fall in sales.
Fashion chain Next was the biggest loser on the FTSE 100 index in early trading, while Dixons Carphone was also among the main fallers after Exane BNP Paribas cut its target price on the shares. The investment bank also downgraded Marks & Spencer and Argos owner Home Retail Group.