Christmas bonus for shops, but more pain is just around corner

BRITAIN’s hard-pressed retailers enjoyed their best trading for nearly a year last month with the help of heavy discounting – but have been warned difficult times lie ahead.

A “dazzling” week in the run-up to Christmas helped like-for-like sales rise 2.2 per cent in December, their strongest since last January, according to the latest survey by the British Retail Consortium and KPMG.

Sales of clothing and footwear were said to have had “a pretty spectacular month” following dire trading in the autumn, while food sales enjoyed their strongest growth for a year on the back of special offers.

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But big-ticket items, including furniture and TVs, continued to suffer amid weak consumer confidence.

The Scottish Retail Consortium, which will publish its December figures later this month, said it expected them to be poorer than the overall UK picture if they were in line with recent trends.

The new study, to be published today, was revealed the day after HMV announced that like-for-like sales fell 8.1 per cent in the run-up to Hogmanay.

Meanwhile, Morrisons, Britain’s fourth biggest supermarket operator, said sales at its stores rose 0.7 per cent in the six weeks to 1 January – compared to 2.4 per cent growth in the previous quarter.

It also emerged last night that lingerie chain La Senza had gone into administration with the closure of 84 stores and the loss of 1,300 jobs.

The latest BRC/KPMG figures painted a different picture to the one shown from figures released by Visa, which said overall spending slumped by 0.8 per cent in December compared with the same period in 2010.

Experts yesterday warned that the upbeat festive figures will not ease fears over the beleaguered sector’s future.

Helen Dickinson, head of retail at KPMG, said: “Sadly, no-one expects this level of demand to be indicative of the year ahead.”

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December’s sales figures were flattered by easier comparisons with the previous year, which was wrecked by Arctic weather, while a frenzy of promotions is expected to have hit profit margins.

BRC director-general Stephen Robertson said: “A solid December result hasn’t rescued a pretty miserable year. Post-Christmas offers brought large numbers of shoppers out but that was generally a short-lived hunt for bargains.

“We’re not witnessing any fundamental change in customers’ circumstances. With discounting driving sales at the expense of margins, the key question for retailers is about earnings from those sales.”

Richard Dodd, spokesman for the Scottish Retail Consortium, said: “The retail sector hasn’t been performing as well in Scotland and we believe that is down to jobs cuts in the public sector, which the Scottish economy is more reliant on.”

Internet sales rose 18.5 per cent in the month from November’s lows, boosted by free delivery and early sales, making it the biggest ever online Christmas.

Electrical items suffered “another challenging month” with sales of TVs and white goods proving “tough”. Tablets and laptops sold well, but the print book outlook remained “very tough”.

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