First quarter trading worst since 2006

During the first three months of this year, 23 per cent of retailers posted negative trading updates compared with 10 per cent in the same period last year, the accountancy firm revealed. The figure is the highest since the first quarter of 2006, when 24 per cent of retailers issued negative statements.

37 per cent of retailers issued positive trading statements, down from 41 per cent in the last quarter of 2007. The remaining 40 per cent of statements were neutral.

David Bush, head of Grant Thornton’s retail services team, said: “The restriction in unsecured bank lending to consumers and the slowing of house prices has had a greater impact on retail spending than the cut in interest rates since Christmas.”

Eight retailers spanning the fashion, electricals and furniture retail sectors issued profit warnings in the first quarter, including DSGi, Land of Leather and Moss Bros.

“The current mood on the high street is one of general nervousness and consequently this has led to a cut in consumer spending,” Bush said. “This research shows that the first three months of 2008 have got off to a shaky start and that for the immediate future there is no short-term end to the consumer spending downturn.”

However, the supermarkets have gone from strength to strength, with all food and drink retailers reporting increases in like-for-like sales for the sixth consecutive quarter. Much of this strong performance was driven by sales in clothing, electronics entertainment, according to Bush.