February sales figures leave analysts divided

Total sales edged ahead 0.1 per cent year on year last month, while like-for-likes slipped 1.8 per cent, the BRC-KPMG Retail Sales Monitor showed.

BRC director-general Stephen Robertson said the figures were disappointing and observed: “The short burst of spending unleashed by January clearances has largely vanished, replaced by sales as weak as most of last year.

“Food sales are proving more resilient but every non-food sector, apart from children’s clothes, saw like-for-like sales down on a year ago.”

But the impact of snow in the early part of the month and differences in the figures disclosed compared with January generated a mixed response from analysts.

Numis analyst Nick Coulter said: “February was not as bad as we feared or as weak as portrayed by the BRC commentary.”

He described the BRC’s decision not to reveal monthly non-food like-for-likes, despite having done so in January, as frustrating. Coulter argued: “While we expect retail sales to fall away as we progress through 2009, we think the data is supportive of the view that we have at least started 2009 from a higher base.”

Singer analyst Matthew McEachran noted that retail’s February performance, allowing for the disruption of snow, was resilient. He said: “We continue to believe that the drag effect on non-food will moderate as consumption, trading down and easing price inflation contributes to slowing growth in food, although in absolute terms we expect March to be worse than February due to the economic backdrop, later timing of Easter and tougher comparatives.”

But Investec’s Natalia Marisova warned: “Dismal economic newsflow looks likely to reinforce consumer caution and, with distortions around Easter timing, may halt the sector rally for now.”

KBC Peel Hunt’s John Stevenson struggled to see a “catalyst for material profit recovery over the next two years”, but said: “There remains a small core of retailers delivering credible medium-term growth strategies”.