| Negative retail statements at two-year high |
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| Written by Adrie van der Luijt | |
| Monday, 07 January 2008 | |
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The number of negative trading statements issued on the London Stock Exchange during the last quarter of 2007 was at its highest level for nearly two years.
The Grant Thornton Quoted Retail Companies Index for the fourth quarter of 2007 found that 22 per cent of retailers posted negative trading updates, up from 15 per cent in the third quarter of 2007. This is the highest figure since the first quarter of 2006 when 24 per cent of retailers posted negative trading updates. The number of positive trading updates dropped to 41 per cent, down from 62 per cent in the third quarter. The remaining 37 per cent of statements were neutral. Grant Thornton's Quoted Retail Companies Index is a review of the quarterly trading statements issued between 1 October and 31 December by those general retailers and food and drug retailers listed on the London Stock Exchange. Post-Christmas sales frenzy David Bush, head of Grant Thornton's Retail Services Team, said that consumer confidence appeared to fall significantly during the final quarter of 2007, despite December's reduction in interest rates. He added, however, that it remained to be seen whether the subsequent well-publicised post-Christmas sales frenzy will have been enough to fully offset the slow start to Christmas trading and a sluggish quarter overall. Breaking the results down further identified that non food and drink retailers suffered the most during the fourth quarter of 2007, with the proportion of retailers in this category posting positive profit announcements halving to 29 per cent. This is down from 58 per cent in the third quarter. “Predominately, non-food and drink retailers felt the full impact of the consumer slow down in spending, particularly those retailers in the fashion industry or those selling higher ticket product such as furniture," Bush said. Like-for-like sales For five successive quarters now, 100 per cent of food and drink retailers have seen an increase in like-for-like sales. Non-food and drink retailers saw a fall in the numbers reporting an increase in like-for-like sales, however, down to 55 per cent in the fourth quarter from 83 per cent in the third quarter. Bush explained that food and drink retailers had shown a greater ability to weather the storm of a slowdown in consumer spending, with five successive quarters of like-for-like sales increases. “It would appear likely that many shoppers over Christmas cut back on spending on presents before they did on food and drink," he added. Profit warnings The number of retailers who issued profit warnings in the fourth quarter increased to five, which has the highest fourth quarter incidence since 2004. All five warnings came from the non food and drink sector, with the majority issued by the fashion/clothing sector, including French Connection, Moss, Sports Direct and Alexon. "While the number of profit warnings has not increased significantly, the number of retailers who urged caution for the year ahead was plainly obvious for all to see, as was the number of retailers using phrases such as 'disappointing' or 'merely satisfactory' results," concluded Bush. Related articles
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