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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 27 March, 2017​​​

February retail sales bounce back

 

Retail sales bounced back in February, up 1.4% compared with previous month, according to the ONS. On a year-on-year basis, sales volumes rose 3.7% in February - over a wider three-month period, however, sales volumes slipped 1.4%. The underlying trend suggests that rising petrol prices in particular have had a negative effect on the overall quantity of goods bought over the last three months. Driven by the rising fuel and food prices, in addition to the weakened pound, inflation jumped to its highest level for three and a half years in February. Averages prices rose 2.3% in February, from 1.8% in January, a higher average than expected and above Bank of England's 2% target. The cost of living is now rising at its fastest pace for more than three years, and is likely to result in a more cautious consumer.

In other news, several retailers have reported positive results in the past week. B&Q and Screwfix owner, Kingfisher, saw sales jump 7.5% in the year ending January 31, while pre-tax profits rose 8.3%. Screwfix performed particularly well, with LFLs up 13.8%, as post-referendum weakness in the pound helped counteract declines in its European operations. Sales at Ted Baker rose 16.4% in the year ending January 28, while pre-tax profits rose 4.4% to £61.3m - sales in its UK and European markets rose 10.7%. Conversely, Next reported its first drop in profits in eight years, down 5.5% in the year to the end of January, while sales fell 2.9%. Despite warning of ‘another tough year ahead’, Next’s focus on improving its product, marketing, services and stores, while also keeping keen control on costs, clearly resonated with investors as Next shares jumped 8% the following morning.

And finally, several retailers have fallen into administration over the last week. Less than two years after it was bought by Poundland, 99p Stores has entered administration, affecting around 60 shops. Shoe chain, Brantano, has also gone into administration, putting more than 1,000 jobs at risk. Brantano was bought out of administration just over a year ago by a company controlled by turnaround specialists Alteri Investors. Sister company, Jones Bootmaker, agreed a £10.5m last-minute rescue deal with private equity group Endless, which could involve more than 70 stores being acquired. And, despite a rescue deal with creditors last year, Store Twenty One is reportedly still struggling to meet rent payments, which could push the retailer into administration.

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