Sales fell across all three of the largest euro member states:
- Italian retail sales showed the largest fall of the three countries, with retail spending dropping at the fastest rate in the survey's history by a wide margin (the index was down from 36.4 to 31.4). Italian sales have now fallen for fourteen straight months.
- German sales fell sharply, with the rate of decline similar to the three-and-a-half year record seen at the turn of the year. The index dropped from 51.5 to 44.6, representing a marked turnaround from the growth seen in February and March.
- French retail sales showed the weakest decline of the three countries; nevertheless sales fell at the fastest monthly rate since January 2006 (the index slumped from 53.3 to 46.2). The April fall contrasted with robust increases in sales over the first quarter.
Sales fell below their levels of a year ago at the greatest extent yet recorded by the survey: The year-on-year sales index plummeted to a new low of 35.7, from 49.3 in March.
Sales by sector - year-on-year sales down in all sectors, led by clothing & footwear
All five product sectors covered by the survey reported a fall in sales revenues compared to a year ago in April, led by clothing & footwear retailers, who reported a survey-record rate of decline as sales of seasonal clothing were hit by cold weather and the early Easter. Record falls were also seen in the household goods and pharmaceuticals sectors, while a near-record decline was indicated in autos & fuel. Even sales of food & drink - boosted by rising prices in recent months - fell sharply in April, dropping at the fastest rate for over two years.
Prices and margins - margins squeezed at record pace as retailers absorbed higher input prices
Prices paid for goods by retailers continued to rise at an elevated pace in April. The prices index fell from 67.4 to 66.5, but remained well above the long-run average of 58.0. The overall easing in purchase price inflation reflected a slowdown in France, to a seven-month low. In Germany, the rate of inflation hit a four-month high and was the sharpest of the three countries, while purchase price inflation in Italy accelerated slightly to a level exceeded by the survey high recorded last October. By sector, food & drink retailers again registered the sharpest overall rise in prices.
Retailers reported a widespread inability to pass on rising costs due to price resistance among cautious customers. As a result, gross margins in the retail sector deteriorated at the fastest rate yet recorded by the survey (the margins index slipped from 41.9 to 39.0). Survey-record rates of decline were seen in both Italy and France, with Italian retailers reporting by far the sharper fall of the two. A considerably more modest rate of margin squeeze was registered among German retailers compared to their French and Italian counterparts, though the rate of decline nevertheless accelerated since March.
Sales against targets - record low performances posted in Italy and France
Retail targets were missed in April to an extent seen once before in the survey's history (in May 2004). In some cases, poor sales relative to targets reflected an underestimation of the impact of the early Easter, but in most instances were linked to adverse weather conditions and subdued consumer morale. The index of actual sales relative to planned sales fell sharply for the second month running, from 36.4 to 31.2. Targets were again missed in all three countries, led by Italy and then France, which both saw record shortfalls. By sector across all countries, targets were missed for all sales categories. Moreover, the shortfalls in clothing & footwear, household goods and pharmaceuticals were all the greatest indicated to date.
Expected sales against targets next month - optimism greater than in March
Retailers were optimistic about targets being beaten in May, and considerably more so than they had been about April. The expectations index rose from 53.3 to 59.1. French retailers remained the most optimistic, followed by their German counterparts. Italian retailers were noteworthy in expecting sales to beat targets in the coming month for the first time since last November. Sales are expected to beat targets across all product sectors in May, especially in food & drink and pharmaceuticals. However, the most notable change was an expectation of beating targets in the clothing & footwear sector following the (correctly anticipated) missing of targets in April.
Employment - net job shedding reported, led by Italy
The combination of rising non-staff costs and weak sales caused employment in the Eurozone retail sector to fall marginally in April, following marginal gains in the first three months of the year (the index fell from 50.1 to 49.5). A slight rise in French retail employment was countered by a small decline in Germany and a larger fall in Italy, where the rate of job losses in the past two months has been higher than at any time since late 2004.
Retailers' buying and stock trends - unsold goods rose despite lower purchases
Purchases of goods for resale by retailers fell sharply in value terms in April, following two months of growth. Furthermore, the decline was one of the steepest yet recorded by the survey and the fastest since June 2005. The index of purchases was down from 51.2, at 46.1. Purchasing was cut to relieve pressure on warehouses as unsold stock built up. The stocks index recorded 53.6, down from a survey-record 56.9 in March, but still indicative of robust growth in retailers' inventories.
