Recent results from the retail sector show that sales and pre‐tax profits of leading stores performed well in the second half of the 1976–77 financial year. Among the multiples, British Home Stores reported sales up by 14 and profits up by 15%. Among the mail orders, both Freemans and Empire Stores did well with profit gains of 28 and 42% respectively, while Mothercare and WH Smith also showed significant gains. There appears to have been some volume growth, particularly with groups such as Mothercare, which has had enormous success with expanding its range of merchandise, but the main boost to profits has come from the relaxation of the Prices Code and some recovery in retail margins. But what will happen this year? The scenario is still rather gloomy. Department of Trade figures for March show a drop in non‐food retail spending of nearly 1% in real terms as against the same month a year ago. And the current trend appears to be downwards, with March registering a drop of 3.6% from February 1977 levels. Durables have been particularly badly hit, showing a decline of 7½% on the same basis, but the ‘replacement cycle’ appears to be having some beneficial impact on the clothing trade. For the present, with inflation in food and other goods still far from modest, despite very recent suggestions of a slowdown in the wholesale goods index, there is little hope of much recovery. Tax rebates promised by the Chancellor are pretty much a drop in the ocean as far as a summer pick‐up in spending goes. But Phase Three wage restraint agreements promise to have more agreement than restraint about them, so the relative decline in disposable income could come to an end in the early part of 1978. But, again, a large rise in wages will immediately take its toll of retail margins. But as the time draws near for another election one might anticipate the government, worried as it is, to attempt to douse the feelings of discontent on the wages front with something resembling a consumer boom.
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