Mothercare, Halfords, JJB Sports all report weak sales
The trading updates back up data showing overall June retail sales were worse than expected
By CFOWorld staff | CFO UK | Published 10:29, 19 July 12
Major retailers including household brands like Mothercare, Halfords and JJB Sports reported on Thursday dire sales adding yet more pressure on the government to fix the economy.
Weak trading updates from the like of major retailers like Kingfisher backed up the recent official data that showed that overall June retail sales were worse than expected thanks to the devastating economic impact of a wet summer and squeezed consumers.
Thursday's raft of retail updates came as official sales data for June showed retail sales volumes fell by 0.7 percent, the sharpest fall since the first quarter of 2010.
"The unprecedented wet weather across Northern Europe has continued throughout our second quarter so far, clearly impacting footfall and consumer demand for outdoor and seasonal products," said Ian Cheshire, chief executive of Kingfisher, Europe's biggest home improvement retailer.
Kingfisher said underlying sales fell 0.4 percent in the 10 weeks to 7 July, the bulk of its fiscal second quarter.
That represented a pick-up from a first quarter fall of 4.8 percent, but reflected price cuts at its B&Q business in the UK and Ireland to clear horticultural stocks as well as other promotions. That will hit B&Q's profit margins.
Shares in JJB Sports tumbled 27 percent after the sporting goods retailer warned it was running into funding problems again and was in talks with strategic partners.
The company, which issued a profit warning last week on the back of poor sales of Euro 2012 football shirts, also reported an 8.7 percent slump in first half underlying sales.
Halfords, the bicycles to car parts business, parted company with its chief executive of four years, David Wild, as it posted a 5.6 percent fall in underlying sales over its first quarter to 29 June.
The wettest April to June period since records began has exacerbated an already tough situation for retailers in an economy mired in recession and austerity, hitting sales of goods ranging from barbecues to bicycles to football shirts.
The economy fell into its second recession at the start of the year in four years. Although recent data showed inflation is easing and unemployment falling, consumers continued to be squeezed by poor wage rises and the government’s austerity measures.
A constant stream of negative headlines about the impact of the euro zone debt crisis is also weighing on confidence.
Prime minister David Cameron will have done little to lift the move when he said on a newspaper report that his programme of spending cuts could last until 2020.
"I can't see any time soon when ... the pressure will be off," he said in an interview with the Daily Telegraph.
photo credit: Reuters
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