Retail sales up as shoppers return

File photo dated 17/01/14 of a shopper on Oxford Street, in central London as retail sales staged a bigger-than-expected bounce-back last month as shoppers returned to the high street after a weather-hit January, according to official figures. PRESS ASSOCIATION Photo. Issue date: Thursday March 27, 2014. The Office for National Statistics (ONS) said sales volumes rose 1.7% month on month in February, smashing forecasts for sales to edge 0.5% higher. It comes after a disappointing January, with the ONS revealing that sales fell even more than first thought, down by 2% against an initial estimate for a 1.5% decline. See PA story ECONOMY Retail. Photo credit should read: Dominic Lipinski/PA Wire

%VIRTUAL-SkimlinksPromo%Retail sales staged a bigger-than-expected bounce-back last month as shoppers returned to the high street after a weather-hit January, according to official figures.

The Office for National Statistics (ONS) said sales volumes rose 1.7% month on month in February, smashing forecasts for sales to edge 0.5% higher.
It comes after a disappointing January, with the ONS revealing that sales fell even more than first thought, down by 2% against an initial estimate for a 1.5% decline.

Even stripping out the often volatile changes from month to month, sales were 1.6% higher in the three months to the end of February compared with the previous three-month period - the highest since August last year.

Experts said the figures boosted hopes for another robust performance from the economy in the first quarter, easing fears that the extreme wet weather and flooding knocked the recovery off track.

Alan Clarke, director at Scotiabank, said the figures showed retail sales "are flying".

The month-on-month rise in retail volumes was led by food stores, which accounted for more than half of the growth, according to the ONS.

Sales across food stores and supermarkets rose 2.1% between January and February and by 1.6% on a year earlier.

This is at odds with recent figures from the "big four" players, with Sainsbury's the latest to blame tough conditions after it broke a nine-year record for rising underlying sales.

The big chains are fighting back with a raft of price-cutting campaigns to win over cost-conscious shoppers.

The ONS said average prices of goods fell year-on-year for the first time since September 2009, down 0.2% in February due to lower costs on petrol forecourts.

Chris Williamson, chief economist at Markit, predicted that recent drier weather conditions should help maintain robust retail sales.

He said: "With the advent of warmer than usual weather in March, clothing and footwear sales will no doubt have received an early seasonal boost, which should help drive sales even higher at the end of the first quarter.

"With 2014 set to be the year in which real incomes start rising again, after having been driven down continually since late-2009, the consumer should therefore play an important role in sustaining the economic recovery," he added.

The figures also showed continuing increases in internet sales, with average weekly spending online up by 12.4% year-on-year to £678.8 million in February - accounting for 10.7% of retail spending excluding fuel.

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Retail sales up as shoppers return

Administrators sounded the death knell for Woolworths in December 2008, leading to store closures that left 27,000 people out of work. Since its collapse former Woolworths stores have become a blight in many town centres and more than 100 of the large stores still lay vacant in January 2012.

Loyal customers didn't have go without the family favourite store for long however as it reappeared online as Woolworths.co.uk in 2009, after Shop Direct Home Shopping bought out the Woolworths name.

The greetings cards specialist became the latest highstreet casualty in May with 8,000 jobs on the line when it was forced it into administration. Its biggest supplier, American Greetings, then bought Clintons out of administration and put the retailer through a rebrand including a new logo and complete in-store revamps.

Its contemporary format includes new fixtures and fittings and easier to navigate stores, and will be rolled out to all 400 UK stores at the cost of £16million. Bosses aim to bring the brand back to profit within two years.

Poor sales in the run up to Christmas was the final nail in the coffin for several struggling chains, including lingerie retailer La Senza, which went bust in January 2012 with 146 shops and 2,600 staff. Kuwaiti retailer Alshaya bought part of the business, which saved 60 shops and 1,000 staff.

La Senza has been struggling in a similar way to other specialist shops such as Game and Mothercare, which have been hit by cut-price competition at supermarkets and have no alternative products to help shoulder losses.

Stricken retailer Blacks Leisure, which employed 3,600 staff across 98 Blacks stores and 208 Millets stores, went into administration in Janurary 2012 after failing to find an outright buyer.

Soon after its stores were bought by sportswear firm JD Sports in pre-pack deal - an insolvency procedure which sees a company being sold immediately after it has entered administration – which saw most of Blacks' £36 million of debt wiped out.

Fashion chain Bonmarche, which was part of the Peacock Group, was sold in January when the group collapsed due to unsustainable debts, resulting in 1,400 job losses and 160 store closures. Private equity firm Sun European Partners bought 230 stores, which continue to trade with 2,400 staff.

Peacocks collapsed under a £740 million net debt mountain in January 2012 in the biggest retail failure since Woolworths. Despite being sold out of administration to Edinburgh Woollen Mill in a deal that saved 380 stores and 6,000 jobs, administrators from KPMG were forced to close 224 stores with immediate effect. This lead to 3,350 redundancies from stores and Peacocks head office in Cardiff.

The high street name continues trading as bosses work to stabilise the situation, yet a further blow was dealt this month with news that the firm's pension fund is in £15.8 million shortfall as a result of the collapse.

Game buckled under its £85m debt pile in March 2012 and was placed into administration after being unable to pay a £21m rent bill. Administrator PwC immediately closed 277 shops, with the loss of 2,000 jobs. Soon after, investment firm, OpCapita bought 333 Game stores, saving more than 3,000 jobs.

Game's demise followed a string of profit warnings and the failure of nervous suppliers, including leading names Electronic Arts and Nintendo, to go on providing the latest games, further damaging poor sales.

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