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Retailers edge ahead, despite the rain

Retailers scraped growth last month as a promotion-led boost for clothing stores was overshadowed by a weather-hit performance from food outlets.

Retail sales volumes edged 0.1% higher between May and June, the Office for National Statistics (ONS) said, which fell far short of City expectations of 0.6% growth.

The figures came as a number of retailers revealed a difficult summer, with Mothercare, JJB Sports and Halfords all revealing dismal results.

The wettest June on record since 1910 was behind a 0.7% drop in food sales last month, the ONS said, while clothing retailers saw sales jump 2.5% as they brought forward their summer sales. The impact of discounting and slowing inflation was seen in the 0.5% drop in retail sales values between May and June.

Against expectations, the Queen's Diamond Jubilee celebrations proved to be a damp squib for retailers as the ONS said it did not have a "significant impact" on sales.

The weak performance in retail will dash any hopes that the economy might have emerged from its double-dip recession in the second quarter, ahead of official growth figures next week.

The economy entered a technical recession in the first quarter of the year, with gross domestic product declining 0.2%, following a 0.3% drop in the final quarter of last year.

The retail sector forms part of the powerhouse services industry, which accounts for 75% of the total economy in the UK.

Elsewhere, department stores saw 0.2% growth in the period, while household goods stores grew by 0.3%.

The ONS reported 1.4% growth in so-called other stores, which covers a broad range of retailers, but was driven by sales in sporting goods and toys.

The total spent in the five-week period to June 30 was £32.7 million, which compares to £26.4 billion in the four weeks to May 26.

Internet sales continued to grow, rising 14.3% to £493.3 million, and accounted for 8.5% of all retail sales values.

Some economists had expected the Diamond Jubilee to lift retail sales with consumers buying food and drink for street parties, purchasing souvenirs, and taking advantage of the extra bank holiday to go to the shops.

Earlier, retail chain Halfords said chief executive David Wild had stepped down as the group warned over profits following a hefty slide in sales, while JJB Sports is to seek another round of rescue funds after seeing its turnaround hopes derailed by poor summer trading.

Source: Jamie Grierson - The Independent

19 July 2012
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