UK Economy
UK retail sales fell in September; Tesco, Debenhams, Foxtons report market stress
By Finfacts Team
Oct 23, 2014 - 11:37 AM

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UK retail sales fell in September, adding to signs that the economic recovery may be slowing. Also Thursday Tesco and Debenhams, the retailers, reported market stress, while Foxtons, the London estate agents, reported falling activity.

The  Office for National Statistics said sales in the retail industry in September 2014 was estimated to have decreased by 0.3% compared with August 2014. However, it increased by 2.7% compared with September 2013 making this the 18th consecutive month of year-on-year growth. This is the longest period of sustained year-on-year growth since May 2008, when there were 31 periods of growth.

The ONS said the underlying pattern continues to show growth with the rolling three-month on three-month growth rate increasing by 0.3%. However, this was the slowest growth seen in this measure throughout 2014.

Textile, clothing and footwear sales provided the greatest source of downwards pressure, decreasing by 7.8% compared with August 2014, and by 4.1% compared with September 2013. Feedback from retailers suggested the fall was a result of unseasonably warm weather meaning consumers have delayed purchases of autumn and winter clothing.

In September 2014, the amount spent in the retail industry decreased by 0.6% compared with August 2014. However, it increased by 1.3% compared with September 2013. Non-seasonally adjusted data show that the average weekly spend in the retail industry in September 2014 was £6.9bn compared with £6.8 bn in September 2013 and £6.9bn in August 2014.

Average store prices (including petrol stations) fell by 1.4% in September 2014 compared with September 2013. This was the largest fall since July 2009. The largest contribution to this fall came from petrol stations, down by 5.4%. Prices at food stores fell by 0.3%, the largest fall since December 2004 when it also fell by 0.3%.

The proportion of online sales were unchanged in September 2014 compared with August 2014 at 11.4%. Online sales increased by 10.1% compared with September 2013.

Annual profits at Debenhams were reported to have dipped 24.8%, partly reflecting the impact on sales of last year's warm winter weather.

The UK's second largest department store chain posted pre-tax profits of £87.2m in the year to 30 August. Like-for-like sales were up 1%.

Sir Richard Broadbent, Tesco chairman, has announced his resignation following an announcement of a bigger-than-forecast overstatement of profits.

Tesco now says that profits in the first half of the year were overstated by £263m compared with last month's initial disclosure of £250m.

Tesco also reported a sharp drop in sales and profits for the first half of its financial year.

Shares in Foxtons fell 15% after the estate agent warned that the London's property market was cooling.

The company, whose 50 branches operate mainly in the capital, reported a "sharp and recent slowing of volumes" in London sales.

London house prices have jumped the past two years, but the comments add to recent data of a market slowdown.

Foxtons attributed the slowdown on economic uncertainty and tighter mortgage lending.

The company said that its property sales commissions were £16.4m in the quarter to 30 September, a fall of 7.8% on a year earlier.


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