This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
In October, the retail sales fell by 0.5% compared with the previous month, with a strong decline of 3.0% in household goods following a particularly strong August and September, according to the Office of National Statistics (ONS).
The news suggest that consumers are tightening their belts after a relatively frivolous summer that saw sales boosted by a prolonged period of hot weather and the FIFA World Cup, with retailers and investors fearing that the UK economy is beginning to show signs of slowing down.
In the three months to October, retail sales increased by 0.4% compared to the same period a year ago, representing a slowdown in growth when compared with the strong set of summer sales, which reached a high of 2.3% in the three months to July, according to the ONS.
‘Retail sales slowed after a buoyant summer with the mild autumn hitting winter clothes sales,’ head of retail sales at the ONS said.
‘Household goods sales also fell in October following two consecutive months of strong home improvements sales,’ he added.
Debenhams faces uncertain future
The cloudy outlook for retail has led to high street department stores like Debenhams to see its share price take a tumble over the last few days.
The British retailer saw its share price fall to 4.5p a share in the middle of Thursday’s trading, leading to the company’s market cap to dip under £60 million before rebounding later that day, closing at 6.19p.
Five years ago, the company was trading at around 100p a share. The rapid decline in share price began shortly after two London-based suppliers severed ties with the retailer over fears that Debenhams may go bust, according to trade publication Drapers.
The publication reported that a few the retailer’s suppliers had cut ties or limited the amount of business they did with Debenhams, after credit insurers cut back on supplier cover.
Debenhams responded to the article by explaining that suppliers were ‘well aware’ of the actions taken by credit insurers and the retailer had sufficient supplies in the run up to the Christmas period.