Festive sales 'at three-year low'

Business Materials 8 January 2008 05:42 (UTC +04:00)

UK retailers had their worst Christmas in three years, the British Retail Consortium (BRC) has said.

Like-for-like sales across the sector - which exclude new store openings - increased by just 0.3% last month from a year earlier, the trade body said.

While overall sales advanced 2.5%, the BRC said it remained the worst December on the High Street since 2004.

Calling for further interest rate cuts, the BRC said the figures pointed "to a very challenging first-half of 2008".

And it warned that if the base rate was not trimmed, like-for-like sales could actually fall in 2008 for the first time in three years.

The Bank of England last cut interest rates in December to 5.5% from 5.75%, amid signs economic growth is slowing against a backdrop of higher energy bills, weakness in the housing market, and the credit squeeze.

Despite this reduction, BRC director general Kevin Hawkins said an additional half-point reduction to 5% was "preferable" for households, retailers and manufacturers.

Its survey, conducted with accountancy group KPMG, found that while sales of food and drink grew in December, those of clothing and footwear fell for a third consecutive month.

And in another key Christmas retail sector, electrical goods, the survey found a mixed picture for sellers, with sales growth "often promotion-driven".

"This study sets the scene for the new year ahead and like-for-like sales look set to move into negative territory as they did in 2005," said KPMG's head of retail, Helen Dickinson.

The findings come as the UK's largest retailers are continuing to report mixed Christmas trading figures.

While Currys and PC World owner DSG International and Land of Leather have been forced to issue profit warnings after weak festive sales, department stores House of Fraser and John Lewis have both reported a bumper Christmas.

Clothing retailer Next also said it had a tough December, while supermarket Waitrose managed to increase its overall sales by a 28.5%.

Analysts are now awaiting Christmas trading figures from Marks & Spencer on Wednesday and Sainsbury's on Thursday, with some speculation that both could disappoint. ( BBC )