Sales flat in February and orders placed on suppliers fell say CBI.
The latest CBI Distributive Trades Survey for February 2015 has surprised many with retailers highlighting a dip in sales, to the lowest perceived levels since November 2013.
The survey also shows that the orders placed upon suppliers fell. Investment intentions for the year ahead were negative in contrast to the last few months, while employment fell on a year ago. Notably, average selling prices fell for the first time since May 2006, with only a slight rise expected next month.
Despite the decline, retailers remain positive that volumes will grow in March, however they have altered their predictions based on recent sluggish activity.
The report comes after a successful spring trade show season for a variety of brands and retailers, suggesting the outlook is more positive for the summer and the latter half of 2015.
Rain Newton-Smith, CBI Director of Economics said: “After a strong start to the year, retailers were disappointed by the unexpected halt in sales growth. Looking ahead, the outlook for the retail sector is fairly positive, with the boost to household incomes from falling inflation likely to support spending. Indeed, firms remain upbeat about the businesses situation over the coming quarter. However, as this survey shows, overall trading conditions on the high street remain challenging.”
30% of respondents reported that sales volumes were up on a year ago, while 29% said they were down, giving a balance of +1%, significantly below expectations (+42%) and the lowest since November 2013 (+1%)
Retailers expect sales volumes to grow next month (+27%), with 44% expecting them to rise and 17% to fall
The volume of orders placed upon suppliers fell (-7%), disappointing expectations of growth (+12%), but firms do anticipate a rise next month (+18%)
Stocks relative to expected demand (+20) were broadly in line with expectations. Stock adequacy is expected to ease back slightly in March (+13%)
Volumes of sales for the time of year in February fell below seasonal norms (-5%), to the greatest extent since January 2014
Retailers expect their overall business situation to improve over the next three months (+11%)
Intentions to invest over the next twelve months compared to the previous twelve were negative (-11%), for the first time since August 2013 (-14%)
The volume of internet sales rose (+47%) at a pace broadly in line with expectations (+49%)
Average selling prices fell (-9%), for the first time since May 2006 (-4%)
Employment fell on a year ago (-21%), with a broadly similar fall in headcount expected next month (-19%)
55% of wholesalers reported sales volumes to be up on last year and 7% said they were down, giving a balance of +48%
The growth in employment was a record high (+52%) and expectations for growth in March (+48%) were the highest since February 2007 (+50%)