August recorded the strongest total like-for-like (LFL) discretionary spending sales growth since March 2023, but as the results are based on August 2022’s very low sales, it reflects another set of concerning numbers for the sector, according BDO LLP.
BDO’s latest High Street Sales Tracker shows that total like-for-like sales in August grew +3.8 per cent from last year’s disappointing base of +3.6 per cent in August 2022. In-store LFL sales grew by +9.4 per cent compared to August 2022, while online sales grew just +2.8 per cent, which barely offset last year’s negative base of -0.6 per cent.
Sophie Michael, head of Retail and Wholesale at BDO LLP, said: “Although these figures may seem positive, they compare to a very weak period in August 2022, when the retail sector recorded its worst growth since the end of COVID-19 restrictions. Factoring in the rate of inflation, the figures also suggest a fairly significant decline in sales volumes. In this context, these results show the sector is failing to shake off sluggish growth rates, which is particularly concerning as we approach the vital autumn and winter trading period.”
The lifestyle sector emerged as the major winner from August’s sales figures, with sales up +4.4 per cent as consumers splashed out on health and beauty products for their summer holidays. In-store sales were particularly strong, growing by an above inflation rate of +14.1 per cent compared to the same period last year. The fashion sector saw sales grow by +4.3 per cent but this was mainly driven by online performance, as store sales grew by just +2.8 per cent. The homewares sector continued its poor performance with growth of +4.9 per cent, which failed to offset a very low base in 2022 of -6.4 per cent.
Sophie continued: “Positive economic news such as falling inflation and rising wages may have buoyed consumer confidence and explain some of the growth we’ve seen, particularly in the lifestyle category. However, with business confidence declining and investment tightening – and with another possible interest rate hike in September – this may well increase the sense of ‘doom and gloom’ among retailers. The period from now through to Christmas is the critical trading period for retailers, and these results certainly don’t give them much cause for optimism as they approach the so-called ‘Golden Quarter’.”