The BRC-KPMG Retail Sales Monitor found like-for-like retail sales rose 1.1 per cent last month, compared with a 3.3 per cent decline in December. Total sales increased 3.2 per cent in January, compared with a 1.4 per cent drop the previous month.
Food sales growth of 5.1 per cent was behind the good performance. Non-food sales slipped 1.6 per cent.
January began well, reported the BRC, but growth slowed towards the end as clearance Sales wound down. Non-food, non-store sales rocketed 19.2 per cent, but this was weaker than the 30 per cent rise recorded in December.
BRC director-general Stephen Robertson said the sales figures were “surprisingly good” but cautioned: “The fundamentals haven’t changed. It remains to be seen whether January’s discount-driven growth was just a blip.”
Singer Capital Markets analyst Matthew McEachran said: “While these figures are slightly better than expected, they have come at the expense of gross margins and reflect a major shift in consumer behaviour.
“With the foul winter weather hitting sales at the start of February and with most anecdotes pointing to a rapid drop-off in demand towards the end of January, we still believe the coming months will be extremely tough and view some of the rebounds in the sector as premature.”
He continued: “We believe consumers brought forward some spending in the knowledge that times are getting tougher. This is a major concern.”
He noted that the 2.1 percentage point difference between like-for-likes and total sales was higher than last reported, “confirming capacity withdrawal is nowhere near” as prevalent as some had thought. He said this reflected the number of deals arising from administrations.
But Seymour Pierce analyst Freddie George said: “We are starting to see the green shoots of recovery [as] lower interest rates are starting to feed through into lower mortgage costs.”
He rated Asos, DSGi, Game and Sports Direct as key buys and has upgraded retailers including Kingfisher and Carpetright.