Slumping U.K. consumer confidence, which fell to a one-year low Friday amid signs of a slowdown in spending, has sent domestic retail stocks into a tailspin.
The FTSE 350 General Retailers Index was down 0.3% by late morning in London, extending a quarterly loss of 1.8%. While the FTSE 350 Food & Drugs Retailers Index was down 0.81% compared to a modest gain for the benchmark FTSE 100.
GfK's long-running Consumer Confidence Index decreased to minus 10 in June, the group said Friday, with the Overall Index Score "just two points away from last year's post-Referendum low of -12."
"We have falls this month reflecting negative sentiment about our personal financial situation and expectations for the wider economy," GFK Head of Market Dynamics Joe Staton said in a Friday statement. "The scores on the general economic situation looking forward and back 12 months are now particularly weak."
Most concerning to retailers will be the eight-point fall in the Major Purchase Index to a reading of one.
Debenhams plc (DBHSY) shares were down 2% to 42.89 extending a quarterly loss of 20%. British retailing stalwart Next plc (NXGPY) saw shares marked 1.14% lower in Friday trading, adding to a three-month fall of 8%.
Supermarkets were also hit by the sudden fall in consumer confidence. Tesco plc (TSCDY) shares were down 1.3% in Friday morning trading at 169 pence, with J Sainsbury plc (JSAIY) marked 0.7% lower at 253.5 pence and Wm Morrison Supermarkets plc (MRWSY) down 0.21% to 239 pence.
Friday's data continued a series of readings that point to trouble for the retail sector that until a few months ago had propped up the U.K. economy in the wake of the Brexit vote in June 2016.
Retail sales fell more than expected in May, according to the Office for National Statistics and the annual rate of growth slipped to 0.9% the weakest since April.
The twin pressure from higher prices and sluggish wage growth have been squeezing household spending and adding to fears of an economic slowdown.
Inflation jumped to 2.9% in May and average real wages fell by 0.6% in the three months to April.
It is something that the Bank of England is keeping a close eye on.
In BoE Governor Mark Carney's most recent speech he said one of the main issue facing U.K. companies is "how consumers will adjust to a period of weaker real income growth."
"When the MPC last met earlier this month, my view was that given the mixed signals on consumer spending and business investment, it was too early to judge with confidence how large and persistent the slowdown in growth would prove," Carney said at the 2017 ECB Forum on Central Banking in Sintra, Portugal. "Moreover, with domestic inflationary pressures, particularly wages and unit labor costs, still subdued, it was appropriate to leave the policy stance unchanged at that time."