U.K. Retail Crisis Deepens as Stores Report Plunging Sales

(Bloomberg) -- U.K. retail sales plunged in May, reinforcing a gloomy picture for the industry that's seen a number of high-profile businesses run into trouble.

Industry figures show total sales fell 2.7% from a year earlier, the biggest drop since at least 1995 when excluding Easter distortions. While some of that relates to strong figures a year earlier, when sales were boosted by sunshine, a royal wedding and the buildup to the football World Cup, political and economic uncertainty also played a significant role, the British Retail Consortium said.

BRC Chief Executive Officer Helen Dickinson said the poor figures increase the risk of further job losses and store closures. Troubled retail empire Arcadia Group, which owns Topshop and Miss Selfridge, hired two restructuring experts to its board in April, has proposed exiting the U.S. and close 23 stores in the U.K. and Ireland.

Consumers have accounted for much of the economic growth since the U.K.'s vote to leave the European Union in 2016,but well-known companies on the British high street have struggled in recent months.

Pressure from online retailers, particularly Amazon, is also taking a toll. Outdoor & Cycle Concepts, which owns sports and bicycle stores, is also planning to shut some of its outlets, while the likes of electronics chain Maplin have collapsed.

On a three-month basis, which smooths out some of the volatility in the figures, non-food sales fell 1.1% in May, according to the BRC figures.

Dickinson said the government must respond, citing high business rates and a tax system that sees retailers paying “vast sums of money regardless of whether they make a penny at the till.”

--With assistance from Mark Evans and Eric Pfanner.

To contact the reporter on this story: Jill Ward in London at jward98@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Brian Swint

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