- Italy saw sales fall for the eleventh successive month. Moreover, the rate of decline gathered pace to show the steepest monthly drop in the four-year history of the survey (the index fell from 44.7 to 43.0).
- Germany recorded a drop in sales for the fourth month running, with the rate of decline largely unchanged on the steep pace seen in the prior two months (the index edged up from 44.0 to 44.2).
- France, by contrast, saw a surge in sales in January following a continuous decline during the fourth quarter. Retailers there registered the strongest gains for nine months (the index jumped from 49.1 to 56.2).
Despite falling from one month earlier, January sales were up on an annual basis for the first time in four months, though the rise was modest (the year- on-year sales index increased from 46.8 in December to 51.4). Sales were largely unchanged on a year ago in Germany, while a near-record increase in France (the second-strongest rise in the survey history) contrasted with a near-record decline in Italy (the second-strongest decline to date).
Sales by sector - growth led by food & drink
Food & drink continued to post the fastest growth in year-on-year sales values - largely reflecting higher prices - while pharmaceuticals also saw a strong increase. Sales of household goods and clothing & footwear were down marginally on a year ago, as the annual rates of decline both eased markedly compared to December. Retailers of autos & fuel, on the other hand, saw sales continue to run well below levels seen a year ago (although the overall rate of contraction was the weakest for nine months).
Sales against targets - pessimistic outlook for February
The drop in sales since December resulted in sales continuing to run well below retailers' targets in January. At 42.1, however, the index of actual sales relative to planned sales indicated the smallest shortfall for four months. Retailers' targets were beaten on average in France for the first time in nine months, but were missed by wide margins in both Germany and Italy. Meanwhile, by sector across all countries, targets were missed for all categories. Autos & fuel saw the most substantial shortfall, followed closely by clothing & footwear. Food & drink saw the smallest shortfall, which was marginal.
Looking ahead, retailers expect to miss sales targets again in February. The expectations index fell from 48.7 to 47.7, signaling the greatest degree of pessimism for over two years. Retailers in Italy were the most pessimistic about targets, while French retailers expected to miss planned sales for the first time in over two years. German retailers were the least pessimistic on average. By sector, food & drink sales are expected to exceed targets in February. The greatest shortfalls are predicted for clothing & footwear and household goods respectively, where sales expectations were at their lowest in four years.
Prices and margins - input price inflation eased, margins deteriorated
Average prices paid for goods by retailers continued to rise sharply in January, although the rate of inflation eased further from November's survey- record pace to a four-month low. The prices index fell from 67.1 in December to 65.3. Rates of inflation slowed in both Germany and France, but ticked up in Italy. That said, the latter still saw the smallest overall rise in purchase prices of the three countries.
Input price inflation eased across all product sectors with the exception of pharmaceuticals. Food & drink registered the strongest rate of inflation for the seventh month running, and clothing & footwear the weakest. Retailers' gross margins continued to fall in January, but showed the smallest monthly deterioration since last April (the index rose from 41.6 to 46.5). Margins fell in Germany and Italy, though the rates of decline eased in both cases, while profits rose in France for the first time since last April.
Employment - marginal rise seen in January
Employment rose slightly in January, continuing the trend of a largely stagnant retail labor market that was seen throughout much of last year. The index increased from 49.8 to 50.7. Higher employment in France – which saw the strongest rate of job creation for seventeen months - was partly offset by marginal declines in both Germany and Italy. Retailers' buying and stock trends - stocks rose despite fall in purchasing activity
Stocks of unsold goods at retailers increased for the eleventh consecutive month in January, rising at a pace slightly below the buoyant rate seen in December (the index slipped from 55.2 to 54.6). France recorded the steepest rise of the three countries, attributed by panelists in many cases to deliberate stockbuilding. In contrast, higher inventories at German and Italian retailers were largely linked to weaker-than-planned sales.
After allowing for seasonal variation, purchasing activity amongst Eurozone retailers was marginally lower in January compared to December (the buying index registered 49.8, from 49.4 in December). Strong growth was posted at French retailers, reflecting stockbuilding amid an improving sales climate. In contrast, purchasing fell at robust rates in both Germany and Italy as retailers there sought to prevent any further unwanted build-up of unsold stock.
