UK retail sales drop 0.9% amid ‘disaster’ for fashion industry

UK retail sales fell faster than expected last month as June’s wet weather dampened appetite for summer clothing.

Retail sales, excluding petrol, fell 0.9 per cent month-on-month last month from a 0.9 per cent rise the previous month, worse than the 0.6 per cent drop that had been anticipated by economists.

Year-on-year sales were up but growth moderated to 3.9 per cent from 5.2 per cent in May and was again weaker than expected – a 4.8 per cent rise had been forecast.

Clothing retailers have been experiencing a tough 2016. Next warned in March that it was facing its toughest year since the 2008 financial crisis as it highlighted a trend of consumers cutting their fashion budgets and spending more on leisure activities and holidays.

The wettest June for years has not helped their difficulties. Sales of clothing and footwear fell 6.1 per cent by volume and 7.2 per cent by value last month.

The Office for National Statistics, which produces the data, said:

All types of stores showed growth in June with the exception of clothing and footwear which struggled again due to the changeable weather. But department stores continued to see strong sales compared with last June – boosted by events such as Father’s Day, the Euro 2016 football and the Queen’s official birthday.

The latest retail data cover the month that Britons went to the polls to vote in the EU membership referendum but it is unlikely the figures can offer any real indication of how their vote to sever ties with Europe will affect the economy.

Keith Richardson, managing director for the retail sector at Lloyds Bank Commercial Banking, said:

Fashion was hit hardest [in June] as the wet weather did nothing to boost sales of summer clothes following an equally poor spring and a very mild winter. Unfortunately, this all adds up to a disaster for the fashion industry.

The pound, which had been up against the dollar earlier, fell into negative territory for the day following the data. Sterling fell as low as $1.3156 after the data was published at 9.30am UK time – at publication it is at $1.3193, down 0.19 per cent on the day.