UK food retailers are outperforming the generally gloomy UK retail market, according to research issued today (4 January).

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The number of negative trading statements issued by UK retail companies on the London Stock Exchange during the fourth quarter of 2007 was at its highest level for nearly two years, according to business and financial advisers Grant Thornton.


The Grant Thornton Quoted Retail Companies Index for the fourth quarter of 2007 found that 22% of retailers posted negative trading updates (up from 15% in the third quarter of 2007) – the highest figure since the first quarter of 2006 when 24% of retailers posted negative trading updates.


However, food and drink retailers fared better. The report identified that for five successive quarters, 100% of food and drink retailers have seen an increase in like-for-like sales.


By comparison, non-food and drink retailers saw a fall in the numbers that reported an increase in like-for-like sales (down to 55% in the fourth quarter from 83% in the third quarter). This sector also suffered in terms of profit, with the proportion of retailers posting positive profit announcements halving to 29% (down from 58% in the third quarter).

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David Bush, head of Grant Thornton’s Retail Services Team, said: “While the number of profit warnings has not increased significantly, the number of retailers who urged caution for the year ahead was plainly obvious for all to see, as was the number of retailers using phrases such as ‘disappointing’ or ‘merely satisfactory’ results.”


With less money to spend this year, it seems customers are, however, continuing to buy in the food and drink sectors whilst cutting back in others.


“Many people have had a little bit less money to spend this year and as a result have cut back on presents more than they did on eating and drinking over Christmas,” continued Bush. “If anything people are trading up slightly and going for supermarkets such as Waitrose instead of their usual, but consumers are maintaining their spend in these areas and cutting back on the non-food products”.