July 30, 2008 / 8:57 AM / 10 years ago

Spanish retail sales suffer record fall

MADRID, July 30 (Reuters) - Spanish retail sales suffered a record plunge year-on-year in June as a severe economic slowdown began to slam both multinational and domestic retailers.

Sales at stores ranging from supermarkets to cellphone shops fell 7.9 percent in calendar-adjusted terms from the year-earlier month, marking the worst performance since Spain began registering the results in 2004.

It was the seventh consecutive month of Spanish retail sales decline, with households goods suffering a 17.9 percent plunge.

“This is retail sales falling off a cliff,” said analyst Daniel Antonucci at Merrill Lynch. “At the very best, the Spanish economy is stagnating.”

Economy Minister Pedro Solbes said Spanish quarterly economic growth was likely to fall to around zero by the end of 2008, but that recession should be avoided.

The depth of problems in the euro zone’s fourth largest economy hit the global stage last week when the world’s largest mobile phone company Vodafone (VOD.L) said its revenues had been slammed by weak business in Spain.

Vodafone blamed problems on hundreds of thousands of immigrants who are losing jobs in Spain as the collapse of a decade-long construction boom coincides with credit restrictions and 13-year high inflation.

Other international firms ranging from car makers Volkswagen (VOWG.DE) and Renault (RENA.PA) to consumer electronics firm Philips (PHG.AS) and French dairy giant Danone (DANO.PA) have highlighted Spain as a weak retail market.

Spanish hotel chain NH Hoteles (NHH.MC) on Wednesday said it would revise a 3-year expansion plan announced last year.

Spanish families are slashing spending as consumer confidence hits a record low and unemployment stands at the second highest level in the European Union after Slovakia.

“We are working under a scenario of not having a recession, but we are working with growth close to zero in coming quarters,” Solbes said in an interview with Spain’s Ser Radio network. “It will be around zero in the fourth quarter.”

June food sales suffered a 6.8 percent fall after the price of goods like milk rose around 25 percent in the last 12 months.

In inflation-adjusted terms, June’s sales figures were the worst in records dating back to 1996.

“High inflation and the weak economy keep people away from the shops, it’s as simple as that,” said Jose Garcia Zarate at 4Cast. (Reporting by Paul Day and Andrew Hay, editing by Mike Peacock)

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