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Hardware and DIY shows poor performance in February

Published: 28 February 2011
High street sales volumes slowed sharply in February, with the hardware and DIY sector performing "particularly poorly", according to the CBI.
Hardware and DIY shows poor performance in February
The latest quarterly Distributive Trades Survey showed 36% of retailers saw the volume of sales rise in the first two weeks to February 16, while 30% said they fell, compared with a year ago. The resulting balance of 6% was "well below expectations", said the report, and the slowest pace of year-on-year growth in eight months.

Sales volumes were weaker across nearly all retail sectors, said the report, with durable household goods and hardware & DIY performing particularly badly, showing the lowest figures since June 2009 and February 2009 respectively.

When asked how sales orders for February compare with the same month last year, only 6% of retailers said sales of hardware and DIY had gone up, while 88% said they had gone down, resulting in a balance of -82%.

Meanwhile, price inflation rose considerably during the month, with 77% of retailers saying average prices rose on a year ago. Only 4% said they fell, giving a balance of 73%, the highest in 20 years.

Looking forward, 15% of retailers said the situation would improve over the next three months, 22% said it would get worse, and 63% predicted things would remain the same.

The volume of orders to suppliers barely grew by 4%, and is expected to decline by 7% next month, the first negative expectation for this measure in nine months. Stock levels remain stable, said the report, with a balance of 20% reporting stocks at least adequate to meet demand.

CBI Head of Economic Analysis Lai Wah Co said: "The positive effect of seasonal discounting on the high street that previously boosted sales has now waned. Retail sales are likely to be more challenging over the coming months. At the same time prices are set to rise considerably as the VAT increase and the soaring cost of raw materials are passed on to shoppers."

The wholesaling sector continued to perform well, with a balance of 47% of wholesalers reporting a rise in sales volumes, higher than the expected balance of 30%. The overall sales outlook for next month also remains positive, said the report.

The results of the GfK NOP Consumer Confidence Index, published today, showed an increase of just one point to -28, 14 points lower than this time last year. GfK NOP Social Research md Nick Moon said: "February's index shows that public feeling has barely changed from last month. The statistically insignificant increase shows that while consumer confidence has stabilised, it has not bounced back."

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