Saturday, 1 November 2008

Retail sales fall more sharply

Blacks Outdoors 5.2% down continuing the sad trend of falling retail sales.
John Lewis down 9.8% following Debenhams -6%.
Plenty of talk of big reductions for Christmas but it won't be quite what the commentators are talking up.
Currently retailers are putting out the Xmas stock and it will be coming out by the pallet load now Halloween is over. That's earlier than usual as stores hope to take your pound. That is, to take your pound from their rivals. The competition will be between shops and the losers will be the ones that start to slash prices.

But back to Blacks. Record numbers of UK families had a home isles holiday despite the awful summer weather. If anything they should have sold much more waterproofs. Media reported the "revival" of the outdoor sector but the reality is they are affected by the same factors as every other retailer.
Price..Quality..Desirability..Necessity. Blacks Leisure have realised that the boardwear fad may be over. They may want to dump it. Probably other clothing stores will follow suit and heavily cut back ranges that aren't safe"basics".
So jeans and a navy t/shirt and beige trousers and a plain jumper all round for spring.
Next may get a revival after all!
For retailers the interest rate can't come soon enough. With the pound so low clothing prices will skyrocket next summer.But many may not be around to worry if Christmas fails to ignite. The rate cut if its coming must come soon instead of waiting for another grandstanding World Leader opportunity.


Old BE said...

Blacks had gone too heavily into fashionable crap. I tried to buy a pair of heavy boots there and all they had were sparkly multi-coloured ones for people who go for the occasional walk in Surrey. I wanted black plain strong ones.

Millets were slightly better but still concentrating on the gap year industry rather than people who need functional stuff.

I am quite worried about clothes price rises with the shocking pound. My next purchase was to be a second Primark suit but I may have to hold off.

Mark Wadsworth said...

Do you subscribe to the fallacy that cutting BoE base rates will lead to a reduction in interest rates? Isn't this pushing a piece of string?

In any event, real interest rates aren't particularly high, it is the amount of credit that is shrinking. Which is because banks are caught between a rock and a hard place - they don't trust businesses and nobody trusts banks. So how about restoring trust in banks the old fashioned way with a sensible, once and for all write down of mortgage assets and debt-for-equity-swaps?

Bill Quango MP said...

Buy now BE. Prices will rise. And Primark isn't looking too hot now either.

You are right about Blacks. I consulted for a chain that did the same thing and went far too heavily into shock/slash/surf/goth wear.
Their target market was teens but their actual market was families.
Sales collapsed.
Still an easy consult.. No more than 10% space devoted to risk lines until their sales warrant mainstream. Put it back how it was.. hold less stock..
Money for old cloth really.

The FCUK and wassup! and PornStar/Playboy & Co-Ed Naked success prompted many to tread the same path. I won't miss them.

Bill Quango MP said...

MW. Its the injection of cash into peoples pockets thats needed.

I'm only looking at the retail here.
If the spending is poor in dec/jan then you can easily add 100,000 to 500,000 to the unemployed with all the associated damage that would bring.
1 in 10 uk workers are in retail. and another 1 in 10 depend on the sector.

You are right about banks .. but i'm talking highstreet consumer confidence.
The problem is how to get the rate cuts passed on instead of the banks just increasing profits.

Old BE said...

Competition between banks will surely help rates move downwards *when they can*. One problem is that banks are repairing their finances as well so the gap between the variable mortgage rates and the BoE rate will stay large for quite a while. Savings rates, meanwhile, are still very generous compared with base rate. This effect will unwind at some point.

Mark Wadsworth said...

BE, One problem is that banks are repairing their finances

Exactly. That £37 billion that The Goblin King stuck into banks looks like about the right figure to me to cover potential mortgage losses. Under a debt for equity swap, about 5% or 10% of bonds would be converted to £37 billion equity, problem solved, finances repaired.

Which, to answer BQ's point above, means that banks won't have to rein in credit to businesses.

Raedwald said...

The Shirtmakers index is also informative; Jermyn Street names once or twice a year do things like 4 for £100 to get rid of the lilac or lemon yellow lines that aren't selling but as of last week they're down to £19 for a supposed £65 shirt and on a broad range. Cashflow I suspect.

When I do stage payment accounts for contractors I like to have an undisturbed full day and clear the lot - usually means bringing a box home. We've always had a relaxed contractual 56 days after valuation, but I'm increasingly getting calls from silly sounding credit girls asking 'when?'. 'When I get around to it' is the answer.

The yottie clothing firms are clearly suffering. I buy my gear from commercial fishing suppliers so no Dubarry yottie kit etc on Raedwald but they make good money from flogging transatlantic yacht racing clothing to yotties who've never been out of the Solent - or they did. I predict some brave faces but inner desperation at this Winter's boat shows.

If anyone imagined the banks would act responsibly and in the national economic interest, they're living in la-la land. They've got their hands on the dosh and will now quite happily send viable firms (and individuals) to the wall. You've just got to keep a step ahead of the bastards and owe them no loyalty, respect or consideration whatsoever. Which has always been my policy.

JPT said...

Invest in sewing machine manufacturers and cobblers..........

Bill Quango MP said...

TM Lewin only offering 10% off. Not good enough for me.
Agree on the Banks.I know of a firm who's overdraft has been cut. yet their creditors want to extend credit terms. The bank alone will send this business down.
How does that help the bank? Just reducing risk won't make a profit.

Yep.. Super Gordon had the once in a century chance to really extract an unprecedented level of compliance of governments wishes when he was holding the cash.
He gave all the money up front to the builders, and now wonders why he's sitting in his living room holding an umbrella to keep the rain off his head..

MW: Debt for equity swap
Not in disagreement with you on this.
Could you call Osbourne?

Mitch said...

He will "announce" an interest rate cut when it suits him politicly like at PMQs or on Richard and Judys sofa.

Anonymous said...

I hate buying clothes. Just hate it. But I needed some togs and ended up in Goldings of Newmarket. The assistant who dealt with me was excellent. Highly recommended to any of you who like to go racing. And, unasked for, I got a £25 reduction.

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