Mood of cautious optimism emerges that trading conditions are starting to stabilise

A quarter into the year expected to be the worst in memory, the much-feared retail meltdown has failed to materialise.

Retailers are cautiously optimistic that conditions are stabilising as total sales edged up 0.6 per cent in March, according to the BRC-KPMG Retail Sales Monitor, bringing the three-month average to 1.2 per cent. A like-for-like decline of 1.2 per cent for March resulted in a 0.7 per cent quarterly fall.

Despite the recession, many shoppers have had more disposable income as a result of the lower costs of mortgages, energy and petrol.

Neil McCausland, chairman of value retailer TJ Hughes and upscale footwear specialist Kurt Geiger, said the businesses he is involved in have met or just beaten forecasts, although budgeting had been “pessimistic”. He said: “It’s not good, but it’s not deteriorating. I don’t expect any material change for the rest of the year.”

John Lewis director of selling operations Dan Knowles said: “We are 1.5 per cent down [in the week to Easter Saturday] but people are still shopping – the world hasn’t ended.”

Reiss chief executive David Reiss said: “People were very wary about the first quarter but things have not been as bad as expected. There is more feeling of normality and not that feeling of panic.”

Schuh managing director Colin Temple said: “We have had reasonable like-for-like growth up to Easter. However, we will wait till June or July before we have the confidence to look at growth.”

The BRC data showed that various struggling sectors, including clothing and footwear, recorded March gains. Toiletries and cosmetics exceeded the year-earlier level for the first time since last June. But homewares and furniture fell.

BRC director-general Stephen Robertson warned: “A revival in big-ticket items would indicate confidence is coming back but, despite the discounts, furniture sales were the worst for at least nine years.”

DIY groups including Wickes reported an encouraging Easter. Focus chief executive Bill Grimsey said sales were “ahead of budget and considerably ahead of last year”.

A B&Q spokeswoman said its Sale created a “real buzz” and sales of greenhouses rocketed 150 per cent.

BDO’s High Street Sales Tracker for the week to April 12 showed fashion retailers achieved their best growth since the start of the year but homewares takings fell.