A jump in demand for new televisions to watch the World Cup helped high street sales beat expectations in June, raising hopes that overall economic growth gathered steam in the second quarter.
But the tournament was not quite so rosy for All Bar One owner Mitchells & Butlers, which suffered as punters stayed home, glued to their new flatscreens, nor for Sports Direct, the clothes chain whose profitable year was hampered by piles of unsold England kits after the team's lacklustre performance.
Nevertheless, the overall picture was one of shoppers shrugging off economic woes and the gloomy prospect of tax hikes – at least temporarily – to head to the summer sales.
The Office for National Statistics said today that retail sales volumes rose a monthly 0.7% in June driven by a boost to electrical goods sales from the football tournament. That was well above forecasts for 0.5% growth. Beyond electrical goods there also appeared to be a boost from the arrival of summer weather with clothing also enjoying a rise.
The pound and FTSE 100 rallied after the data, which showed the strongest underlying rise in sales for more than two years. Economists said the data bodes well for the first official estimate of second-quarter GDP growth out tomorrow, which on average is expected to come in at 0.6% – double the 0.3% pace in the first quarter.
"Retail sales performed well in June – even if England's football team didn't – as they were lifted by the football World Cup, good weather and evidence of increased discounting by shops," said Howard Archer, economist at IHS Global Insight. "The retail sales data raise hopes that GDP growth could surprise on the upside."
On a three-month-on-three-month basis, retail sales were up by 1.7%, the biggest jump since April 2008. The ONS said the value of electrical goods sales jumped more than 10% in June.
England's early exit from the World Cup was particularly disappointing for Sports Direct, the sportswear chain controlled by billionaire founder Mike Ashley. The build-up to the tournament started off well enough, with the March launch of England's red "away" kit, and as the World Cup kicked off things were looking positive. The chain had its busiest ever day when England played their first game against the USA. But then things turned as England's fortunes declined.
"Unfortunately, the period during the tournament was less successful and sales correlated with the poor performance of the England team and the negative mood this created among fans and consumers," the company said.
In the end, Sports Direct was left with a mountain of unwanted shirts. Its buying team had followed the seedings and was "confident of at least a 'last eight'" outcome for England. "So exiting the tournament before that meant, in effect, that we were one game short (although this was exacerbated by the disappointing performance in the four games). The negative impact of clearing the excess stock will offset some of the positive pre-tournament trade," the company said.
The World Cup blow overshadowed news of a 50% rise in full-year pre-tax profits to £102.1m and the company's confidence in more growth next year.
At Mitchells & Butlers, the World Cup failed to bring the boost enjoyed by more purely drinks-focused pub rivals Enterprise Inns and Punch Taverns. They had reported a boost to trading but M&B said it suffered a slowdown.
Reporting a 1.2% rise in like-for-like sales in the nine weeks to 17 July, M&B – the owner of the Harvester and O'Neill's chains – said growth would have been more like 3.2% had the World Cup not hit food sales.
"When an England football match kicks off mid-evening on a Friday or on a Sunday lunchtime, which are peak dining occasions, it knocks a number of people back who would normally come in," said chief executive Adam Fowle.
The company was also wary about the outlook for people's discretionary spending in the UK, echoing economists warnings that today's retail sales figures could be as good as it gets.
They also pointed to surveys at odds with the official data.
The CBI's recent monthly survey of retailers showed that at the start of June more companies suffered falling sales, compared with a year ago, than saw them rising. The balance of -5% of firms was better than May's surprisingly weak -18% and beat retailers' own expectations, but was still below economists' predictions for a return to growth at +5%.
With the government cutting spending and introducing a VAT hike to 20% next year, analysts fear consumer spending could stagnate over coming years.
"These figures were stronger than expected, although they may have been artificially inflated by World-Cup-related spending," said David Kern, chief economist at the British Chambers of Commerce. "While the recovery in consumer spending is welcome, there is no room for complacency. The economy is still weak, businesses are struggling, and the full impact of the emergency budget's austerity measures are yet to take effect. Risks of a setback remain serious."