The UK retail sector rebounded in February, posting its best monthly retail sales figures for three years. Monthly figures are never enough to prove a trend, but there were elements within the figures which could give rise to tentative confidence for some operators in this embattled sector.
February's figures need to be taken in context of a rather more inclement corresponding month in 2012 but nonetheless the 2.7 per cent rise in like-for-like sales and 4.4 per cent growth in total sales was stronger than most commentators had dared to imagine.
What was particularly notable within the figures was the strong showing from the non-food and furnishing and floorings categories which suggests that improved conditions in the housing market are beginning to feed through with bedroom furniture, sofas and beds proving to be strong sellers, albeit against a snow-affected period last year.
The figures also suggested that the food sector was not overly affected by the horse meat scandal which erupted during the month. Food continued a rather sluggish start to the year as consumers continued to rein in their budgets but increased demand for fresh produce and ingredients made up for a collapse in frozen meat sales. Of note, there could be a fillip out of the horse meat scandal for UK producers and supermarkets such as Morrison (MRW) which place greater emphasis on the provenance of their products with 78 per cent of shoppers saying that British origin was more important to them compared with just 55 per cent a year ago.
The bounce in clothing and health and beauty sales puts into sharp relief the disappointing trading statement from Debenhams (DEB) earlier this week which noted that snow-blighted trading in January sent like for like sales down by 10 per cent during a 13 day period and required a sale period in the following days to rebalance stock levels which hit margins. This contrasted starkly with sparkling trading figures from Associated British Foods’ (ABF) Primark division, and does not bode terribly well for Marks & Spencer’s (MKS) fourth quarter trading statement, due next month.
