Shock surge in UK retail sales

Ben Southwood
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RETAIL sales shot up at their strongest pace in more than three years in February, a surprising jump in a sector hit by high-profile collapses over a difficult Christmas period.

In an unexpected fillip to the high street, total sales soared 4.4 per cent over the year to last month, according to data from the British Retail Consortium (BRC) and KPMG released this morning.

The figures are in stark contrast to last February’s 0.3 per cent decline, and show the fastest growth in 36 months. In like-for-like terms, sales were up 2.7 per cent, the fastest pace of expansion since December 2009.

The BRC welcomed the figures with cautious optimism, but warned that the retail sector was not out of the woods yet.

“After the disappointing figures that brought 2012 to a close, it’s reassuring that the sales momentum established during an encouraging January has built not faded,” said BRC director general Helen Dickinson. “But it’s too soon to assume this represents the permanent turnaround we need.”

The improvement was driven by big-ticket purchases on homewares, with electronics, furniture and flooring topping the BRC’s list of best performers.

But shoppers spent more across all sectors, with clothing sales seeing their strongest growth in five months and DVD sales boosted by the release of Skyfall at the end of the month.

The figures will be a breath of fresh air to the UK’s under-pressure retailers, who have watched iconic brands including HMV and Blockbuster fall into administration since the start of the year.

Despite the fact that growth in like-for-like food sales – which came in at one per cent – lagged behind non-food by almost a percentage point, food market analyst Joanne Denney-Finch said the figures were encouraging.

“Given the food industry was under such intense scrutiny in February, the sector will be pleased that sales stood up so well,” the IGD boss said.

Online sales continued to expand rapidly, rising from 10.1 per cent over the year to January to 10.9 per cent over the year to February.

The data was buttressed by similar figures from BDO, released yesterday, which showed like-for-like sales were up 3.9 per cent over the year.

KPMG’s head of retail David McCorquodale used the opportunity to call on chancellor George Osborne to use his 20 March budget to “give the sector some much needed breathing space” by freezing business rates.

“If the proposed rise in business rates goes ahead then retailers will be placed under inexorable pressure,” McCorquodale warned.