The recession on Britain’s high street is the worst for more than 40 years, the boss of the Co-operative Group was claimed, as shares in a trolley-full of retailers plunged.
By Louise Armitstead
6:00AM BST 26 Aug 2011
Peter Marks said that for the first time people have been cutting food budgets – normally an area that is relied upon as “recession-proof”.
“People are spending less on food – that’s a first,” said the Co-op’s chief executive. He added that he and other retailers are having to cut prices radically to shift stock.
While normally around a quarter of products are on promotion, approximately 40pc are discounted at the moment, Mr Marks said. He added: “We’re not into ‘buy one, get one free’ – we’re into ‘buy one, get two free’.”
He added: “It has been a tough six months, the toughest I’ve ever experienced in my 40 years of retailing. I don’t think we have come out of recession since 2008… I’ve operated through several recessions – this is by far the longest.”
The Co-Op, which is Britain’s fifth biggest supermarket group, unveiled a fall in first-half pre-tax profits to £230.8m. Group sales fell from to 6.89bn in the six months to July, down from £6.95bn during the same period last year. Food sales were £3.7bn, 4.6pc lower than last year.
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Mr Marks warned profits were unlikely to improve by the full year. “I really don’t see any light at the end of the tunnel,” he said.
His gloom was reflected across the high street. Topps Tiles, the UK’s biggest tile and wooden floor specialist, issued a profits warning, sending the shares plunging 13½ – 29pc – to 33p. Matt Williams, chief executive, said he has seen a “step down in consumer confidence since the beginning of July”.
Topps Tiles, which employs 1,600 people in the UK, said revenues dived by 10.4pc in the first seven weeks of its fourth quarter.
Mr Williams warned that jobs could go: “With fewer sales in store, it’s difficult to argue with the logic that we need fewer people to service those sales.”
A range of retailers were punished on the stock market. Clinton Cards tumbled 10pc; JJB Sports was down 7pc; Marks & Spencer fell 4pc; and Kingfisher, the owner of B&Q, was off more than 3pc.
The CBI’s latest quarterly Distributive Trades Survey found 46pc of retailers said sales had fallen in the two weeks to August 16th with only 13pc recording a rise.
The trade body said that retail sales volumes had fallen at the fastest rate for a year. According to the survey, retailers are more negative now than at any time in the past 18 months about the immediate prospects for sales growth.
Judith McKenna, chairman of the CBI’s survey panel and chief operating officer of Asda, said: “August was a tough month on the high street. Sales volumes fell at a pace not seen in more than a year, as consumers have continued to see their real incomes squeezed by a combination of inflation and weak wage growth.”