U.K. retailers had their worst June in a decade as consumers reined in spending ahead of the country’s European Union referendum, according to figures from accounting firm BDO.
Sales at stores open at least a year fell 3.6 percent last month, with weekly figures deteriorating progressively, BDO research showed. A separate report from researcher GfK showed U.K. consumer confidence has crumbled since voters opted for Brexit.
BDO’s research confirms comments from retailers including Marks & Spencer Group Plc that shoppers trimmed spending in the lead-up to the referendum. U.K. retailers could see more pain following Britain’s vote to leave the EU as sterling’s decline pushes up costs and ebbing demand weighs on results, analysts at Jefferies and Deutsche Bank have said.
“Many retailers may have hedged against the falling pound for the short term, but if sterling stays at these levels, the cost of importing goods and further erosion to margin may need to be passed onto the consumer,” said Sophie Michael, head of retail and wholesale at BDO.
U.K. retail stocks have plunged in the two weeks since the Brexit vote. The FTSE 350 General Retailers Index is down 16 percent in that time.
After gaining 3.8 percent in the first week of the month, same-store sales fell 8.1 percent in the final week, BDO said. Sales of fashion and products for the home were worst hit, falling 4.9 percent and 6 percent, respectively. Dunelm Group Plc, which sells home furnishings, said Thursday that fourth-quarter like-for-like sales fell 0.6 percent.
In addition to uncertainty surrounding the referendum, business was also affected by poor weather, the advisory firm said. Primark’s sales weakened recently due to a cold April, parent company Associated British Foods Plc said this week.
Since the Brexit vote, consumers have become gloomier. A measure of their confidence taken by GfK after the referendum showed the steepest decline since 1994.
Marks & Spencer on Thursday reported its steepest drop in clothing sales in eight years, with first-quarter same-store sales of clothing and home goods falling 8.9 percent.
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