Irish retailers are braced for their worst Christmas in history as sales continue to be battered by the slump in consumer confidence.

Retailers will not see sales growth until the second quarter of 2010, according to David Fitzsimons, chief executive of trade body Retail Excellence Ireland (REI).

Despite abysmal trading conditions last Christmas following the global banking collapse, Fitzsimons believes this year will be worse.

He said: “This Christmas will be the worst in history. In the second quarter next year, there might be some marginal growth. But costs have increased and the sales aren’t there. Much of the sales are margin-less. It’s a grave situation.”

Like-for-like retail sales in Ireland plummeted 16.5 per cent in the second quarter to the end of June, according to REI. May’s trading was the worst month’s since January 2007, with like-for-likes slumping 18.8 per cent as consumer confidence dropped in the face of rising unemployment and inaction by the Irish government. In June, the rate of decline slowed, with sales down 11.9 per cent.

Over the three months, all sectors performed badly, with men’s fashion and footwear “bearing the brunt”, suffering like-for-like declines of 25.8 per cent and 20.5 per cent respectively. Ladies fashion dropped 16.9 per cent, food sales fell 9.5 per cent, while gifts and homewares decreased 15.8 per cent. 

Fitzsimons said the Irish retail industry has “never been in a more fragile state”, with most retailers experiencing “extensive losses”.

He said retailers are trying to modify their wage costs by introducing three-day weeks, but added that the government needed to do more to help, such as bringing the Irish 21.5 per cent VAT rate in line with the UK’s.

Fitzsimons said that there will be “significant” failures over the coming months, as rent as a percentage of sales hits its highest ever level.

However, he added: “The fact that June performed marginally better than previous months does indicate that the rate of decline may have bottomed out.”