Britain's household goods and clothing retailers are bearing the brunt of a slowdown in consumer spending, while grocers are being helped by higher food prices, trading updates and a survey show today.
Fashion groups Laura Ashley and Alexon, tiling specialist Topps Tiles and the Co-Operative Group, which runs Britain's fifth-biggest supermarket chain, all agreed that trading was tough and likely to remain so. But they are coping very differently.
The Co-Op posted a 36% rise in first-half operating profit helped by sales growth at its food business, while Laura Ashley's first-half underlying profit rose 13%, boosted by new store openings and steps to improve profitability.
Alexon, in contrast, warned annual profits would miss forecasts, while Topps Tiles said earnings would probably fall in its new fiscal year, which starts later this month.
A closely watched survey from the Confederation of British Industry confirmed the generally gloomy picture, as well as the differing fortunes within the industry. It showed retail sales fell for a sixth month in a row in September, with grocers faring best and household goods stores worst.
Store groups are struggling as indebted shoppers curb spending amid rising food, fuel and mortgage costs. Home-improvement groups have been particularly hard hit, due to a plunge in housing market transactions.
Topps Tiles, Britain's biggest tile and wood flooring specialist, said sales at stores open at least a year had dropped 13% in the past eight weeks.
Fashion and homewares group Laura Ashley also reported tough trading in home-related products. Like-for-like sales in home accessories such as lighting and bed linen were down 13.3% in the 26 weeks to July 26, while furniture sales fell 13.2% on the same basis and decorating was down 8.3%.
But it was helped by a 6.7% rise in same-store sales at its fashion business, helped by strong demand for knitwear and dresses.
Clothing and footwear group Alexon, however, is coping less well, hit by a particularly weak performance at its Bay Trading stores aimed at girls and younger women. It reported a 40% fall in first-half operating profit , and Finance Director Robin Piggott said that full-year profit could be about half what some analysts' have been expecting.
The Co-operative Group, Britain's biggest mutual retailer, said it was benefiting from savings generated from its founding merger in 2007, as well as higher food prices. Like-for-like food sales were up 5% in the 28 weeks to July 26, which the group said outperformed market growth of 4.6%.
But CEO Peter Marks said that growth was driven almost entirely by inflation, and there was very little volume growth in the grocery industry due to shoppers' constrained budgets.
