|Marks & Spencer's Chairman Lord Burns and Chief Executive Sir Stuart Rose |
The UK Nationwide Consumer Confidence Index dropped one point to 85 in December – the lowest level since February 2007. In spite of the quarter point cut in rates in December, ongoing economic uncertainty and the impact of higher food and petrol prices seem to be continuing to affect consumers’ confidence. In another report today, Marks & Spencer said that sales had fallen in December.
Consumers’ feelings about the current economic and employment situation, reflected in the Present Situation Index, deteriorated in December. The index fell three points from 91 to 88 due to more negative views about the economy. The Expectations Index (how consumers feel about the economic and employment situation and income in six month’s time) remained stable (83), but the underlying data shows a significant weakening in confidence in the economy and future income expectations.
However, consumers still seem to feel optimistic about their jobs, both at the moment and in six months time and it is this which is supporting expectations in particular. The Spending Index (consumers’ willingness to spend) picked up by a respectable five points in December, but at 68 remains well below the average for the year of 82.
The UK Nationwide Consumer Confidence Index uses a similar methodology to that of the US Conference Board, the most highly regarded Consumer Confidence Index in the US, widely acknowledged as a key US economic indicator. Nationwide’s monthly survey is compiled in partnership with TNS.
Fionnuala Earley, Nationwide’s chief economist, said: “Another weak month for Consumer Confidence is not surprising given current economic conditions. Continued uncertainty about the future path of the economy along with a weakening housing market was bound to affect consumer sentiment. Early signs of strong consumer presence at the seasonal sales is encouraging, but the need to persuade shoppers through heavy discounting could itself be seen as a signal of underlying caution. Further rate cuts expected in the first quarter of 2008 may help to improve matters, but it is likely to be a few months before consumer confidence recovers to levels seen earlier this year.”
UK house prices fell in the final three months of 2007, the first quarterly drop for seven years, HBOS Plc said yesterday.
Also on Tuesday, the British Retail Consortium reported that UK retail sales rose only 0.3% in December on a like-for-like basis, compared with December 2006, when sales were up 2.5%.
Today, Marks & Spencer Group, the UK's biggest clothing retailer, reported its first same-store sales fall in 2 1/2 years after shoppers reined in Christmas spending.
Sales fell 2.2% at stores open at least a year in the fiscal third quarter ended Dec. 29th.
Sir Stuart Rose, Chief Executive said: “Market conditions became more challenging through November and December. We continued to drive footfall, and volume growth in General Merchandise was strong at 5%. Price deflation was 6%, reflecting our continued focus on offering customers better values. We held market share in General Merchandise at 10.6% and in Food at 4.3%3.
“We did not discount in the run up to Christmas. Stock levels were well controlled over the period. We had a strong start to the Christmas Sale and sale stocks have now cleared.
“Direct was strong, with sales from our website up 78%, reflecting further growth in customer numbers, transactions and conversion. International also performed well with sales up 15.1% over the period.
“We expect trading conditions to remain tough throughout 2008. We are well positioned with a strong product offer and better than ever values across our business. We now have 70% of our stores in the modernised format and a strong pipeline of new space for 2008 and beyond. Direct and International continue to make good progress.”
Since 6 November M&S has repurchased 1.18% of our shares in issue at a cost of £124.8m.