High street retailers are experiencing one of the toughest summer trading periods in years, thanks to the double whammy of poor weather and interest rate hikes.
Frequent rain has washed away many of the gains from the season's positive start, with many retailers counting on deeper promotions to salvage the season.
One source who works closely with all the key players on the high street, described current trading as the worst he had seen in a decade. "January to April was very good, but since May trading has dived off a cliff. The luxury end is doing well and the usual suspects at the value end are holding their own, but the screws are really turning on the middle market."
He added that many retailers were sitting on excess stock, which would hit margins. "They may be able to shift volume through the Sales, but it will lead to significantly reduced margins," he explained. "There is a lot of product out there that should have been shifted at full price. It couldn't have been a worse trading period; we are at the bottom of a trough."
The director of one young fashion business said summer came too early. "Many people on the high street have banked huge amounts of money through stock on fine weather, but sadly the weather has turned awful," he said.
Norrie Stewart, managing director of Scottish chain Internaaionale, said he was discounting more heavily, with some product selling for more than 75% off. He added: "I don't think the Sales will be particularly short, because shifting white, lightweight strappy product in weather like this will be tough. We just have to trade through."
The value end of the market was not faring much better, with the managing director of one high street value chain saying that "volatile" weather had forced bigger markdowns than usual. "We went on Sale last week, which is in line with last year," he said. "However, like most retailers, the markdowns are as much as 70% and on much more product than normal. We wouldn't usually start the Sale with such high discounts." He added that the chain was already taking delivery of autumn stock.
Another value player said it had been the worst June in a long time. "We have the most competitive pricing and best product in a while, but have been hit by interest rates and the weather."
Some retailers, including Next, are holding back on Sales until the end of the month, with several citing a clean stock position thanks to tight buying.
Department stores, which traditionally fare better during poor weather, were still cautious. John Lewis buying director for fashions Peter Ruis said he would be concerned by another interest rate rise, despite current positive trading.
But Robert Kimpton, chairman of mainstream womenswear chain Viyella, said unseasonable weather and interest rate rises had not affected its more mature customers. "We've been trading nicely above our targets - at least 10% to 15% - each week," he said.