No golden egg for shops this Easter

AFTER the worst Christmas for 23 years, retailers are hoping tills will be ringing again this Easter. But a never-ending flood of dreadful results from big High Street names and the early timing of Easter mean they are more likely heading for another disappointing holiday season.

Retail monitor SPSL predicts 3.1% fewer shoppers over the Easter fortnight than last year.

Dr Tim Dennison, a director of SPSL, said: 'The start to 2005 has certainly been quieter than retailers would have liked. Even the timing of Easter is conspiring against shopping. Traditionally it is the time of year when DIY-ers and gardeners go out and spend. However, the earlier it falls, the less people have got into makeover mood, and this Easter is the earliest for 16 years.'

High Street spending has slowed dramatically since the boom last spring as five interest rate rises from the Bank of England have taken their toll on consumer confidence. The end of the housing boom has also made consumers think twice before splashing out.

Official figures yesterday showed household spending in the fourth quarter of last year rose 0.2%, down from 0.7% in the previous three months and the weakest performance since the run-up to the Iraq war.

Meanwhile, High Street stalwart Next revealed a 3.5% drop in sales over the seven weeks to 20 March and sees no improvement in trading conditions for at least six months. Woolworths and Topps Tiles also said the market was tough.

However, analysts reckon that while consumers have undoubtedly taken their foot off the accelerator, they are unlikely to apply the handbrake.

HSBC's John Butler said: 'Recent evidence has been disappointing but not catastrophic. Consumers are likely to continue to get support from rising employment and real income growth, but uncertainty over the housing market and reduction in consumer credit growth are providing downside risks to the outlook.'

The housing market will be the key. A falling property market can be disastrous for the High Street. Rising house prices fuel confidence, encouraging people to borrow and spend. But when they fall, consumers tend to hunker down.

Malcolm Barr at JP Morgan said retail sales growth is stabilising close to zero. 'Such an outcome is not going to be comfortable for retailers. But it is not weak enough to keep interest rates on hold, given the Bank of England's rather hawkish inflation forecast.'