Christmas Sales: Retailers Expected To Report 'Dazzling' Surge

Retailers Expected To Report 'Dazzling' Christmas Sales: 'But Don't Pop Champagne Corks Yet'

A frenzy of pre-Christmas discounts helped retailers drum up more trade in December, official figures are expected to reveal on 20 January, but the beleaguered sector's woes are set to continue this year.

The City predicts figures from the Office for National Statistics will show that retail sales were 0.7% higher than the previous month, as desperate store chains were forced to drop prices earlier than normal to attract bargain hunters.

Although sales are believed to have returned to growth in December following November's 0.4% fall, profit margins across the industry have been hit by the price drops, heaping further pressure on retailers struggling to stay afloat.

And the sector's problems are set to continue in 2012 as shoppers continue to cut back on non-essential spending and the economy teeters on the edge of recession.

Chains including fashion retailer Peacocks, lingerie firm La Senza and outdoor specialist Blacks Leisure have fallen into administration in recent weeks and further collapses are feared.

The British Retail Consortium said stores enjoyed a "dazzling" week before Christmas and its best month of sales since January but believes much of the sales surge was created by bargain hunting.

The post-Christmas sales are also believed to have done well, with retailers such as Next attracting queues at numerous stores across the country before their Boxing Day sales.

Victoria Cadman, an economist at Investec Securities, predicts that sales will rise in line with City forecasts in December.

But she added: "Still, we are wary of popping the new year champagne corks just yet, as consumer spending power is set to be squeezed further this year, with CPI inflation forecast to outstrip earnings growth through much of 2012, albeit to a smaller degree than in 2011."


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