Retail sales still struggling but a third of managers confident about future

A new survey from the IBEC-affiliated industry representative body, Retail Ireland, shows a slight improvement in business sentiment within the sector; but the big numbers are largely unchanged from earlier in the year.

In terms of sales outlook, profitability and business confidence, roughly half of respondents indicated no change to their feelings.

Around 30% of retailers, according to the survey, expect their sales to decline over the course of the next three months; with just over 20% anticipating a rise.

"The results of the survey show an improvement in sentiment in the retail sector, but it is important to note that participating companies completed the survey before developments over the last two weeks involving Greece and the eurozone," said Torlach Denihan, director of Retail Ireland.

"We did this special survey to assess the situation in view of developments such as the decline in cross-border shopping and the slight but noticeable improvement in the consumer confidence index," he added.

"Retailers’ perceptions of the prospects for their own businesses are improving, expectations on sales are broadly static and a very slight increase in customer numbers is expected."

Mr Denihan reiterated Retail Ireland’s call for an overhaul of the commercial rental system.

"Prices to the public have been cut substantially and every element in the retail supply chain has made a major contribution to this, with the exception of landlords. They locked in massive and unsustainable rents during the property boom.

"Every landlord should reduce rents on a voluntary basis in the interest of lower prices for the consumer, saving retail jobs and helping the country regain lost competitiveness," he said.

Mortgage debt market showing signs of life

Over the last few days it has become apparent that transaction numbers in the UK mortgage debt market have increased significantly. Indeed a number of investors who have acquired large mortgage debt portfolios, often for well below their face value, have now stepped forward with discount offers if customers remortgage their homes with new lenders. So how does this work?

If you for example you purchased a mortgage debt portfolio with a face value of £200 million but only paid £150 million there is the potential to lock in a profit if you can persuade underlying customers to remortgage elsewhere by offering a 20% discount. Effectively the portfolio of mortgage debt was acquired for a 25% discount to face value so if customers move after accepting a 20% discount then the investor is locking in a profit of 5% on the transaction. This is just one of a number of opportunities available in the mortgage debt markets for those willing to take the risk that the UK property market is over the worst.

In some ways this can be classed as a win-win situation with investors able to lock in profits while underlying mortgage customers are able to re-mortgage their homes elsewhere after pocketing a 20% discount on their outstanding debt.