1、 1 Property Times UK Retail Market Q2 2010 Retail outlook remains uncertain 14 July 2010 Contents Executive Summary 1 2 Economic overview 2 Retail sales 3 Retailer roundup & Q2 trading 4 The winners 5 The losers 7 Administrations / closures & acquisitions / disposals 8 Author Colin Burnet Retail Re
2、search +44 (0)20 3296 4231 Contacts Martin Davis Head of UK Research +44 (0)20 3296 2304 Hans Vrensen Global Head of Research +44 (0)20 3296 2159 Whilst GDP growth is now estimated to have been 0.3% in Q1 2010, and forecast to be slightly stronger in Q2, those consumer indicators impacting the re
3、tail market (retail sales, consumer confidence, unemployment, earnings growth) paint a more negative picture. With reference to the recent Emergency Budget, the benefit of a higher tax threshold for those on low incomes is likely to be off-set by the increase in VAT. As a result, whilst retail sales
4、 volumes may be affected, no spending rush is predicted before January, with consumers already being more considered in their approach to spending. More retailers posted positive like-for-like trading results than negative in Quarter 2, and, with only one major retailer failure during the quarter, i
5、t is clear that the majority of retailers are adapting to the current climate. Looking forward, weak retailers will remain vulnerable to further reductions in disposable income, particularly mid-market retailers which are been squeezed by strength at both the luxury and budget ends of the market. Fi
6、gure 1 Like-for-like UK retail sales growth 2006 to Q2 2010 - 10- 8- 6- 4- 20246810J a n u a r y F e b r u a r y M a r c h A p r i l M a y J u n e J u l y A u g u s t S e p t e m b e r O c t o b e r N o v e m b e r D e c e m b e r%GrowthYear-on-YearM o n t hL i k e - fo r - L i k e U K R e ta i l Sa
7、 l e s G r o w th (y e a r - on - y e a r )S o u r c e : B R C - K P M G20082006200720092010Source: DTZ Retail Research Economic overview 2 GDP growth is now estimated to have been 0.3% in Q1 2010, up from the initial estimate of 0.2%, with business survey data pointing to a stronger Q2 in prospect
8、. However, while the headline results for the PMIs, particularly manufacturing, have remained firm, other indicators are lagging, with growth in service sector new business slowing and sustained weakness across a range of consumer indicators. Retail sales have been broadly flat since early autumn, w
9、hile consumer confidence has edged down for the last three months. The general consensus is that, with reference to the recent Emergency Budget, the benefit of a higher tax threshold for those on low incomes will be off-set by the increase in VAT. As a result, whilst sales volumes may be affected, n
10、o spending rush is predicted before January, with consumers already being more considered in their approach to spending. Employment data continues to be a drag on the consumer outlook. Although the claimant count measure of unemployment has fallen in recent months, the picture is now more downbeat a
11、cross almost all other labour market indicators, with inactivity and ILO unemployment rising and further declines in hours worked. Oxford Economics (OE) expects the impending public sector cuts to keep unemployment above 8% for the next couple of years, whilst the combination of weak earnings growth
12、 and above-target inflation also means that there is likely to be no real wage growth this year, following declines in the two previous years. With little support from the labour market, a higher tax bill for top earners and no repeat of last years drop in interest rates, real incomes are forecast t
13、o fall this year. Consumer sentiment remains fragile and, with households showing no sign of wishing to re-leverage, OE anticipate that consumer spending will make only modest positive contributions to growth this and next year. The recent rise in CPI inflation, to 3.7% in April, has been due to a n
14、umber of temporary factors, all of which will soon fade. OE expects April to be the peak, with the significant degree of spare capacity pulling CPI inflation back below target in early 2011, allowing the Bank of England to maintain base rates at current levels for the rest of this year. Figure 2 GDP
15、, consumer spending & CPI growth forecasts - 6- 5- 4- 3- 2- 10123452008 2009 2010 2 0 1 1 2012 2013% g r o w t hR e a l G D P G r o w t h C o n s u m e r S p e n d i n g G r o w t h C o n s u m e r P r i c e I n f l a t i o nSource: DTZ Research Figure 3 Short-term and long-term interest rate foreca
16、sts 01234562008 2009 2010 2 0 1 1 2012 2013%S h o r t T e r m I n t e r e s t R a t e s ( Y e a r E n d ) L o n g T e r m I n t e r e s t R a t e s ( Y e a r E n d )Source: DTZ Research Retail sales 3 In April, UK retail sales values fell 2.3% on a like-for-like basis, according to the British Reta
17、il Consortium, from April 2009, when sales had picked up 4.6%, boosted then by Easter falling in April in 2009, whereas it fell in March in 2008. The April trading period included only Easter Sunday and Monday this year, but all of Easter in 2009. On a total basis, sales fell 0.2% against a 6.3% inc
18、rease in April 2009. Food sales fell back, largely reflecting Easter timing. Non-food was also affected by the earlier Easter, but also by pre-election uncertainty and consumer caution, which favoured essentials and replacements over discretionary items. Clothing and footwear slowed and homewares fe
19、ll back below year-earlier levels, despite some further discounts and promotions. UK retail sales then rose by 0.8% on a like-for-like basis in May, and 3.0% on a total sales basis, as the sunnier second half of the month provided a welcome boost to overall sales. Food sales returned to growth and c
20、lothing and footwear benefited from the sunny weather, as did outdoor DIY and leisure. Homewares showed some improvement but big-ticket items often struggled, despite further discounts and promotions, in the face of consumer uncertainty about job and income prospects. In June, UK retail sales values
21、 then rose 1.2% on a like-for-like basis, when sales had picked up 1.4%. On a total basis, sales were up 3.4% against a 3.2% increase in June 2009. Food sales growth remained steady in June, but clothing and footwear sales growth slowed. TVs benefited from the World Cup, and the good weather boosted
22、 outdoor DIY and leisure, but at the expense of indoor homewares. Retail sales in Central London were up 3.6% in April on a like-for-like basis and 11.6% in May. The return of overseas visitors, after the recent flight disruption, along with improving consumer confidence in London and sunnier weathe
23、r, produced the strongest London sales growth since December. Scottish sales figures continue to under-perform the UK average, with like-for-like decline of 2.0% in April and 0.8% in May. Fears about public spending cuts are having a bigger effect in Scotland, and consumer confidence has slipped fur
24、ther than elsewhere. Looking forward, although consumer uncertainty will continue to negatively impact retail sales, according to recent research from Verdict, total retail consumer expenditure growth is forecast to be positive in 2010 (1.5% excluding the impact of inflation). The rate of growth is
25、subsequently forecast to increase steadily to 3.1% by 2014. Figure 4 Like-for-like UK retail sales growth 2006 to Q2 2010 - 10- 8- 6- 4- 20246810J a n u a r y F e b r u a r y M a r c h A p r i l M a y J u n e J u l y A u g u s t S e p t e m b e r O c t o b e r N o v e m b e r D e c e m b e r%GrowthY
26、ear-on-YearM o n t hL i k e - fo r - L i k e U K R e ta i l Sa l e s G r o w th (y e a r - on - y e a r )S o u r c e : B R C - K P M G20082006200720092010Source: DTZ Research Table 1 Retail sales growth Q2 2010 Location Apr May Jun Qtr 2 (%) (%) (%) (%) UK -2.3 0.8 1.2 0.0 Scotland -2.0 -0.8 n/a n/a
27、 Central London 3.6 11.6 n/a n/a Sources: BRC, SRC, LRC & KPMG Retailer roundup and Q2 trading 4 Despite the continued tough conditions for retailers across the board, as Figure 5 demonstrates, there were more positive like-for-like trading statements released during Q2 than negative. There has als
28、o been a marked lack of retailer failures during Q2, with Textiles Direct the only major casualty. In terms of sector performance, homewares, electrical and big ticket items in general continue to struggle, highlighting the reluctance of consumers to commit to large purchases while uncertainty over
29、the future looms. Figure 5 Retailer like-for-like trading results Q2 2010 - 25 - 15 - 5 5 15 25 35Game Gr o u pHMVA r g o sT h o r n to n sPC W o r l dW a te r s to n e sA l exo n G r o u pC o m etW H S m i thB&QH Samu elF r en ch C o n n ecti o n (U K & EU )C l i n to n C ar d sH o meb aseT o p p s
30、 T i l esD eb en h amsA s d aN B r o wnGr eg g sW m M o r r i s o nT JX Eu r o p eSa i n sb u r y sT escoH al fo r d sC ar p et r i g h tJacq u es Ver tW i ckesEr n es t Jo n esN ext (i n c D i r ect)D u n el m M i l lM o th er car eM ar ks & S p en cerT h e F r ag r an ce Sh o pJD Sp o r tsI cel an
31、 dL au r a A sh l eyC u r r ysM atal anM aj es ti c W i n ePr i mar kPets at H o meB u r b er r yJJB Sp o r tsM o ss B r o sJ o n e s B o o t m a k e rSu p er g r o u pT h eo F en n el lA SOS (U K )M u l b er r yL F L % g r o w t hSource: DTZ Retail Research There is strength at the luxury end of th
32、e market (Mulberry, Theo Fennell, Burberry, Ted Baker) and the value end (Iceland, Matalan).Up to the minute, fast-fashion retailers have also proved to be resilient, with Primark and Superdry reporting strong results during the quarter. We are witnessing the squeeze in discretionary income resultin
33、g in a polarisation of spending, as luxury and value propositions prosper at the expense of the mid market, which sees its market share shrinking as it is squeezed at both ends. According to Verdict, this polarisation of the retail market is forecast to continue. Verdict forecast that, between 2010
34、and 2014, retail consumer expenditure growth will be 59% at the premium end of the market, 29% at the value end, but a potentially ruinous -7% for mid market retailers. Supermarket growth has stalled slightly as a number of the major grocers reported weaker trading figures (Tesco, Sainsbury, Asda) o
35、n the back of a reversal of the inflationary trend of the last 12-18 months. Looking forward, the increase in VAT will add to inflationary pressures and in most sectors retailers will be forced to pass this on to customers. Prices are expected to rise in the latter half of 2010 as retailers pre-empt
36、 the increase. The main impact of this will be to reduce volumes but the effect will be minimal given that consumers shopping habits are already changing. Consumers are already cutting back on spending and when purchasing discretionary items, are taking a more cautious approach, considering the bene
37、fits of the purchase. The VAT increase will only serve to inflate this trend and ensure that value for money remains top of consumers minds when shopping. As in the previous quarter, what retailer demand exists is not broadly spread, but is concentrated on the best units in prime pitches for key ret
38、ailers, and on prominent secondary units at low base rents, for the value sector. The balance of negotiating power remains with tenants, although landlords have hardened their stance over the previous six months. Re-based rentals on recent lettings or lease renewals should aid future growth. Looking
39、 forward, there is still a rump of weak retailers out there struggling to survive, despite the clear out of the last couple of years. We are likely to see a continued divergence of performance between the weak and those retailers that truly understand their customer demand and can adapt to it. Retai
40、ler roundup the winners 5 N Brown Like-for-like sales up 0.1% in the 18 weeks to 3 July. Total group revenue increased by 1.1% in the same period. Marks & Spencer - UK like for like sales up 3.6% in 13 weeks to 3 July. General merchandise, including clothing, was up 6.0%, with sales growth in food
41、of 1.5% in the same period. ASOS UK sales up 32% for quarter to 30 June. International sales up 11% in the same period. Moss Bros Like-for-like sales up 12.6% in the 16 week period to 22 May. Average gross profit margin for the period was 2.7% below last year, but the impact of a strong sales perfor
42、mance lifted total gross profit ahead of last year. Next - Like-for-like (inc. Direct) sales up 2.2% in the 13 week period to 1 May. Total Brand sales reported to be at the top end of expectations and are reported to be encouraging. Jacques Vert Like-for-like sales up 1.5% in the nine weeks since 24
43、 April. Gross margin of 63.7% (up from 61.5% in 2009) in the previous financial year. Mulberry - Like-for-like sales up 35% in the 10 weeks from the start of April. Pre-tax profits beat City forecasts at 5.1m for the 12 months to the end of March. Ted Baker Total retail sales up 20% for the 19 weeks
44、 to 12 June, The UK firm also confirmed that it was continuing with its global expansion, and will open four new stores in the US later this year. Burberry Group like-for-like retail sales up 10% in 3 months to 30 June. Double digit growth reported in the UK. Primark does not publish like-for-like s
45、ales figures, but analysts estimate an increase of between 7 and 8 % in the 16 weeks to June 19. Matalan Like-for-like sales up 6.7% in the year to 27 February The retailer reported operating profit before exceptionals of 132.9m in the same period. Supergroup Like-for-like sales up 17% for year to e
46、nd April. Total retail sales up 75% in the same period. Laura Ashley - Like-for-like sales up 5.3% in February to May period. Due primarily to a leap in online business. Jones Bootmaker - Like-for-like UK retail sales up by 17% for the 4 months to end of May. The company delivered improving trade th
47、is year. Schuh - 21% rise in EBITDA to 17.3m for the year to March 28. Schuh, which operates 57 stores in the UK and Ireland, increased sales by 12m to 146.4m. Ernest Jones Like-for-like sales up 1.8% in the 13 weeks to May 2. Total sales up 7.0% in the same period. Theo Fennell - Like-for-like sale
48、s up 23% in the 10 weeks since 31 March. Full-year loss before tax and exceptional cut from 2m to 0.25m in the year to March 31. JJB Sports Like-for-like sales up 12.1% since 1 Feb. Over the same period, its gross margin rose by 7.3% to 43%. JD Sports UK and Ireland retail like-for-like sales up 4.1
49、% in the 8 weeks to 5 June. Sports Fascias were up 5.1%, Fashion Fascias down 1.2% in the same period. Currys - Like-for-like sales up 6.0% in the 28 weeks ended 1 May 2010 for UK & Ireland Electricals. Underlying operating profit improved by 81% to 32m in the same period. The Fragrance Shop Like-for-like sales up
