Asos may be powering ahead despite the Brexit vote, as its latest sales figures showed today. But it doesn’t look like many of its UK fashion retail peers are, or does it? No, according to the British Retail Consortium (BRC). That said, it’s still early days and contradictory figures seem to be emerging too with a Barclaycard report suggesting a mini-spending spree in the first week after the Brexit vote.
Confused? You should be. OK, let’s look at the BRC first. The latest report from the retailers body shows consumer spending slowing as a combination of relentless rain and the Brexit vote made the idea of buying a new summer dress or sandals, well, a bit of a damp squib.
Spending rose 0.2% year-on-year last month, down from a 1.4% rise in May and dragged lower by clothing and footwear that saw their worst growth in seven years. On a like-for-like basis, which excludes new stores opened since June last year, sales fell 0.5% in June having risen by the same amount in May.
“The slowdown was predominantly driven by a decline in sales in the fashion categories and isn’t a surprise given that June 2015 saw record growth in clothing and footwear,” said BRC’s Helen Dickinson. And that’s where it gets even more confusing. Was the late June slowdown a reaction to tough comparisons with the prior years? Was it the pretty appalling weather? Or was it the Brexit vote? Maybe it was a bit of all three.
“While the ramifications from the Brexit vote may well affect consumer confidence, retailers will be hoping the long-promised heatwave and potential stay-at-home holidays [due to the weakening pound] will be enough to drive shoppers back to the high-streets,” David McCorquodale, head of retail at survey sponsor KPMG, said.
Now to Barclaycard. It said consumer spending was up 3.6% across May and June combined, and up 2.1% in the first post-Brexit week. However, discretionary spending in pubs and restaurants fell, according to the company that processes around half of all credit and debit card transactions in Britain. This contradicts an earlier report from Visa that suggested weak spending in the week after June 23. Maybe Barclaycard users all voted Leave and felt particularly optimistic? Hmmmm, not so sure about that!
Actually, plenty of analysts have to the payday boost that always happens in the last week of the month and also said that the fall in dining/drinking out is a good indicator of how cautious consumers are.
Anyway, Barclaycard MD Paul Lockstone said: “While it’s too soon to draw long-term conclusions on how spending and sentiment have been affected by the outcome of the referendum, the early indication is that the majority of consumers avoided a knee-jerk reaction.”
Listen, if you’re looking for clarity, you might as well give up now. It will take time to tell whether Brexit will hurt retail sales. If (or when) prices start to rise and if the predicted recession happens, is probably more likely to affect consumer spending and both of those events may not happen until next year.
Watch this space…