The British economy seems a little confused if not undecided: while some retailers have reported a surge in their quarterly revenues some have warned of weaker profit outlooks.
As per the results of a survey disclosed on Friday, in June British retailers saw the biggest rise in sales in more than 6 years.
As a result of last year’s Brexit referendum, the slowing British economy fed inflation which in turn led to a modest pay hike which hurt consumer spending. Recent surveys showed a sharp drop in consumer confidence.
However in typical British fashion, consumers seem to defy such gloom with accountancy firm BDO stating that its monthly High Street Sales Tracker found overall like-for-like sales rising by 1.3% in June.
“This growth was off a negative base of -3.6 percent for the same month last year, but after four months with no growth, this might offer a ray of sunshine to UK retailers,” said BDO.
BDO disclosed that fashion sales rose by 1.4% while homeware sales were up by 0.5%.
“Retailers will take heart from consumers’ willingness to spend, but there is evidence shoppers are delving into their savings which is clearly not a sustainable position,” said Sophie Michael, head of retail and wholesale at BDO.
As per a few officials from the Bank of England, the slowdown in consumer consumption will be offset by higher exports and investments. However, in contrast to this expectation, two of the eight sitting monetary policy makers voted last month for a rate hike. A third supporter of the hike, has since left the BoE.
Reports from retailers themselves however have been mixed.
While the electricals retailer Dixons Carphone reported that consumer spending was holding up, and the Associated British Foods’ budget fashion arm Primark reported a strong quarter of trading, sofa retailer DFS Furniture warned on its profit outlook.