LONDON, (MNI) – UK retail sales in December saw their strongest
month since January, boosted by one-off factors, according to the
British Retail Consortium.

The BRC/KPMG December data showed like-for-like sales up 2.2% on
the year. December 2010 sales had fallen 0.3%, hit by snow. On a total
basis, sales were up 4.1% against a 1.5% increase in December 2010.

BRC/KPMG said that on both measures – and excluding Easter
distortions – sales performance had been the best since the start of
2011.

Food sales growth picked up and non-food also improved,
but promotions boosted sales. Clothing and footwear showed good
gains on last December’s weak sales. Homewares improved but big-ticket
items and furniture sales remained down on a year ago, hit by consumer
caution.

Stephen Robertson, Director General, British Retail Consortium,
said:

“The comparison is with severe snow disruption a year ago.
Discounting was deeper and started earlier and the vital Saturday
Christmas-Eve added another big trading day to the final run-up.
Post-Christmas offers brought large numbers of shoppers out but that was
generally a short-lived hunt for bargains. With discounting driving
sales at the expense of margins the key question for retailers is about
earnings from those sales.”

Robertson argued that the underlying picture for sales growth in
2011, as well as the outlook, was miserable.

“For many customers, economic reality has bitten again since the
New Year and, with consumer confidence returning to levels last seen
during the recession, 2012 is expected to be an equally challenging
year.”

Helen Dickinson, Head of Retail, KPMG, also put a rather
dismal gloss on these seemingly buoyant data:

“December’s figures saw retailers achieve a 2.2 per cent increase
in like-for-like sales, albeit against a background of heavy discounting
and long opening hours. The month’s figures saw the strongest growth in
food sales of the year as people spent on food for the big day. Clothing
and footwear also had a spectacular month. Deals helped consumers
finally upgrade winter wardrobes as winter commenced in earnest.

“Whilst these results must be viewed in a positive light, it must
also be noted that they have come at the end of a year which witnessed
declines in most non-food sectors and are against December 2010’s weak
results, which saw sales badly affected by poor weather. Sadly no-one
expects this level of demand to be indicative of the year ahead.”

National Statistics will release seasonally adjusted retail sales
data on January 20.

–London newsroom: +44 20 7862 7492; email: dthomas@marketnews.com

[TOPICS: M$B$$$,MABDS$]