Retail sales rebound thanks to 'perfect conditions' — but Marks & Spencer misses out

Retail sales rose 1.2% in June, BRC says; Relief after brutal start to the year for retailers, but doubts over how long it will last; Marks & Spencer stock down over 3% after 0.5% fall in sales over last 3 months.

Steve Rowe, CEO of Marks and Spencer, poses for a photograph at the company head office in London, Britain, November 30, 2016.

LONDON — The second warmest June on record and the Muslim holiday Eid helped retail sales rebound last month.

The British Retail Consortium (BRC) said on Monday night that retail sales rose by 1.2% in June. Food sales grew by 3.6% compared to the same month a year earlier and non-food sales — everything from fashion to beauty — rose by 0.9%.

BRC said June had the "perfect conditions" for retailers, with CEO Helen Dickinson saying: "The arrival of summer provided a welcome pick-up to sales growth in June, particularly to non-food categories which saw a reversal in fortunes after a prolonged period of sluggish growth.

"Leisure pursuits and activities spurred consumer spending on summer clothing, beauty products and outdoor toys, which were also boosted by gift purchases over Eid."

But Dickinson cautioned: "On closer inspection, the year on year numbers belie the fact that rising food prices are responsible for the main component of growth and have prompted more cautious spending towards discretionary non-food items."

Paul Martin, UK Head of Retail at KPMG, says in a statement: "Whilst the latest figures are definitely more favourable than last month’s, retailers must look at the bigger picture. Inflation and household debt are fuelling part of this retail growth, meanwhile, the industry is undergoing significant structural changes more broadly. The retailers succeeding are those embracing change."

June is the first upbeat month for retailers this year, after a period of stagnant or falling sales. Dickerson says: "There’s a question mark over whether this spending momentum will last."

Trading figures from Marks & Spencer, released on Tuesday, underlined the trouble retailers are facing. Total sales fell by 0.5% in the 13 weeks to the start of July, with clothing and home sales down by 1.2% and food sales down by 0.1%.

Marks & Spencer's shares are down over 3% after just over two hours of trade in London:

marks

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Laith Khalaf, a senior analyst at Hargreaves Lansdown, says in an email on Tuesday morning: "Things are getting less bad in Marks and Spencer’s clothing division, but with sales still falling there’s still not too much to cheer about.

"Overall conditions for high street retailers remain pretty grim, with consumer purses under pressure and competition coming from all angles. M&S is swimming quite hard against this tide, so it deserves some credit for treading water."

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