Retail & Leisure News - 01 August, 2017
Consumer confidence dropped to -12 in June, according to the latest GfK figures, its lowest level since the immediate aftermath of the Brexit vote in July last year. The drop in June was driven by the general economic situation; GDP edged up by 0.3% in Q2, up from 0.2% in the previous quarter, but below the 0.7% growth seen in Q4 2016. And confidence is also been hit by continued pressure on consumer spending power - according to the Asda Income Tracker, the majority of UK households saw their spending power decrease in June. Northern Ireland and Wales were worst affected, while the North East was the only region where households were better off. Overall, UK household’s discretionary income shrunk by 47p on average YoY in June, the third consecutive month of decline. With lending conditions favourable, households are borrowing and dipping into their savings to make up for the squeeze on spending power.
Despite these gathering macro and micro economic headwinds, strong retailers continue to adapt, with many reporting positive sales growth, albeit often at the expense of margin and profit. LFLs at Bonmarché rose 4.2% in the 13 weeks to July 1, while total sales rose 7.6% and online sales jumped 39%. Joules has announced a 19.6% jump in sales in the year to May 28, while profits improved from a £1.2m loss last year to £8.9m in 2017. The Perfume Shop saw revenues rise 1.1% in the year to December 31, while online sales jumped 33% - however, operating profits dropped 11%. Wilko reported stable sales growth, although profits were down 80% in the year to January 28, due to rising costs, the falling value of the pound and the National Living Wage. Wilko also warned of 'severe economic headwinds' ahead. And finally, AO World reported revenue growth of 2.5% in Q1, but has warned that the UK market remains challenging.
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Director, Head of Retail Research (UK & EMEA)
+44 (0)20 3147 1155
Director, Head of UK Retail & Leisure
+44 (0)20 7318 7838