Shares in leading retailers fell on Tuesday following a big fall in UK retail sales figures for October.
The monthly report from the British Retail Consortium showed non-food sales fell 2.9% in the three months to October and 2.1% over the year to date – the biggest decline in five years.
The figures follow a report by the Confederation of British Industry (CBI) last week that showed retail sales in the year to October at their lowest level since March 2009.
M&S biggest faller
Marks & Spencer saw the biggest drop of up to 6.4% in early trading, down from 344p to around 322p, before recovering to 328p by mid morning.
ASOS was the next biggest faller, down 4% at one point to 5757p from 5998p at Monday close, before recovering to the 5870p mark.
Kingfisher was down 1.9% on its Monday close of 316p, dropping to 310p on Tuesday morning.
Retailers ‘feeling the pinch’
Sports Direct fell 1.3% from 387p to 382p, while Ted Baker was down 1.1% at 2686p after ending Monday at 2715p.
“It's clear retailers are beginning to really feel the pinch from higher inflation," said Rain Newton-Smith, the CBI's chief economist.
"While retail sales can be volatile from month to month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand.”
Consumers reining in spending
Alex Marsh, Managing Director at Close Brothers Retail Finance, commented: “Consumers continued their reluctance to invest in big ticket items in October, as non-food retail sales saw further decline.
“Despite a record low rate of unemployment, a lack of real wage growth meant consumers had to rein in their spending and focus on just the essentials.”
He said data showed sports and leisure retailers saw a drop in sales as the winter months set in, while retailers selling furniture, car parts and car accessories saw an uptick.
“Retailers must take note of the forces that could further affect shopping habits in the coming months.
“The prolonged Brexit negotiations are clouding consumer confidence, and coupling this with a rise in interest rates, we could very well see consumers tightening their belts even further just at the time when retailers are banking on Christmas shopping,” he said.