UK summer washout means mixed news for business

http://www.theguardian.com/business/2015/sep/04/uk-summer-washout-means-mixed-news-for-business

Version 0 of 1.

The chilly August that just capped off the coldest British summer in three years meant mixed fortunes for businesses. It was a washout for clothes retailers but sunny times for cut-price airlines. Bookings slumped for campsites in some parts of the country, but crowds flocked to some indoor attractions.

The soggy bank holiday in many parts of the country ensured it was the wettest end to the summer in 50 years in Dorset, Hampshire and Guernsey, according to the Met Office. Cornwall and the south coast had to cope with up to three times the average rainfall for August.

Chief scientist Prof Julia Slingo said: “No one can deny that we have had a pretty disappointing summer with a lot of unsettled weather and only a few warm spells, especially through July and August. Our weather has been dominated by low pressure over and to the west of the country that has brought us periods of heavy rain from the south – what we call the Spanish plume.”

The sweltering heat of July, when the mercury rose to 36.7C (98F) at Heathrow, seemed a distant memory. In the end, the average summer temperature was just 13.9C (57F).

With the rainclouds hovering, high street stores endured their worst month since the height of the global banking crisis in November 2008 as shoppers spent on holidays abroad instead of clothing or home furnishings.

Underlying clothes sales plunged 5.5% in August – the fourth month in a row that sales fell – and made the summer the worst in six years, according to a survey of retailers by accountancy firm BDO.

“With the exception of the last week of the month, consumers deserted the high street. The strength of the pound has encouraged Brits to spend more on holidays abroad rather than in the UK,” said Sophie Michael, head of retail at BDO.

Cool temperatures and rainy skies were also bad news for food retailers – which have already been struggling as the supermarkets fought a price war and the cost of food commodities slumped.

“The weather has been particularly poor and hit sales of soft drinks and ice cream, meaning sales are flat in these categories when members should have seen a good seasonal spike,” James Hall, the director of the Bestway convenience store group told trade journal The Grocer. Grocery prices slid 1.7% in the three months to 16 August and with no help from a surge in barbecue parties or picnics total sales rose just 0.9%.

One clear beneficiary, however, has been easyJet. The no-frills carrier said on Thursday it expected to make annual profits of up to £700m, at least £40m more than expected, after a record August. The company flew 7.1 million passengers last month after a surge of late bookings, as Britons headed for Málaga, Alicante, Faro and Palma de Mallorca.

A spokesman for easyJet said rain and colder than average temperatures in August added to the exodus. Beaches and cities across Europe were popular destinations for holidaymakers encouraged by the strength of the pound against the euro.

In the UK, the picture varied with the weather across the country. Business at visitor attractions and holiday resorts depended very much on the location.

In Scotland, the number of people heading to visitor attractions fell 3.9% in July, according to Visit Scotland, although the number of visits to indoor activities was up. Garden visits were down 5%.

Camping and caravan sites in Northern Ireland, Scotland and south-east England saw bookings fall by between 1% and 5%, according to the Camping & Caravanning Club, while drier East Anglia enjoyed a 14.7% rise in the number of pitches sold this summer.

But a spokesman for the club said it was hard to say how much the weather had played a part. “Our members live by the motto that there’s no such thing as bad weather, just bad planning, and I’m sure it won’t have deterred them in any way,” he said.

He may have a point: sales of pitches in south-west England, where the Met Office recorded damp weather, were up 5.9% and Wales also did well with sales up 12.4%.

Visit Cornwall said August had been mixed as many visitors booked ahead and were prepared for potentially bad weather. Visitor numbers at the National Maritime Museum in Falmouth were up 50%, as families looked for an alternative to the beach.

“While rain and cooler temperatures have dominated, we have had some welcome days of glorious sunshine so it certainly hasn’t been all doom and gloom,” said Malcolm Bell, chief executive of Visit Cornwall.

One concern for tourist businesses is whether those who made the best of it despite the weather will have vowed that would be the last holiday they spend on the UK’s shores. “If people have booked and committed to a holiday when the weather isn’t at its best, they will make the most of it, but the worry is how it will affect their destination decisions for future years,” said Bell.

Meanwhile, BDO identified a silver lining for retailers. “The last week of August was cold and wet enough to make people think about autumn,” said Michael. “So fashion retailers saw an uplift in sales in that final week that this summer’s fragmented discounting has so far failed to deliver.”