The storm clouds hanging over the High Street darkened yesterday as JD Sports warned of a slump in sales and business leaders said they will continue to ‘scale back investment and hiring’.
In the latest sign the economy is floundering in the wake of Rachel Reeves’ tax-raising Budget last year, JD Sports said it anticipates ‘continued strain’ after sales tumbled this summer.
And the employers’ body CBI warned that the Chancellor’s policies are ‘continuing to bite’ as retail sales fell for the 11th month in a row in August.
‘Retailers’ struggles send a clear signal: business cannot be asked to balance the books again at the autumn Budget,’ said Martin Sartorius, the CBI’s principal economist.
JD Sports warned of ‘unemployment risk’ as higher costs led to employers axing jobs this year, with fears of worse to come ahead of the Budget.
High Street misery: JD Sports said it anticipates ‘continued strain’ on shoppers after sales tumbled this summer
Iceland boss Richard Walker also warned yesterday of ‘another tough few months ahead’ as food prices rise.
The updates came as the summer ends with businesses fearing more tax hikes.
A slew of bosses, including from JD Sports as well as Tesco, Sainsbury’s, Asda, Morrisons, Aldi, Lidl and John Lewis, last week warned that further tax increases would hurt Britons’ living standards.
JD said UK sales fell 6.1 per cent to £806million over the three months to August 2.
It said it was expecting dismal trading to continue due to an ‘ongoing shift in the footwear product cycle’, in which consumers have turned away from behemoth Nike.
This has caused a drag on sales in the US, though there were signs of a turnaround over the summer.
Victoria Scholar, head of investment at Interactive Investor, said JD Sports was facing ‘an unpleasant cocktail of pressures’ but still managed to deliver a pick-up in the US.
Despite the gloom, JD Sports shares rose 3.6 per cent, or 3.34p, to 97.36p. Retailers have been hit by a £7billion increase in annual costs after Rachel Reeves
hiked employer National Insurance Contributions and the minimum wage.
Companies have also sounded the alarm on proposed reforms to the business rates system, which they argue will penalise larger shops.
And there has been criticism of a package of workers’ rights reforms, which has heightened fears over recruitment.
Sartorius called for a reprieve in this autumn’s Budget. He said: ‘Weak demand
and higher labour costs continue to put pressure on margins, dampening sentiment across the retail and wider distribution sector.
‘This downbeat outlook is reflected in firms’ plans to scale back investment and hiring.
‘Building business confidence through delivery must be the priority, starting with a rethink of the Employment Rights Bill, which risks piling on unnecessary costs and holding back jobs and investment.’
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