Supplies of toys and electronics for Christmas could be hit by a no-deal Brexit, the boss of Sainsbury’s has warned as he revealed another set of disappointing sales figures.

Mike Coupe, the chief executive of the supermarket group, which also owns Argos, the UK’s biggest toy retailer, said the Brexit deadline of 31 October was “not far off the worst day possible” for retailers, who would find it difficult to stockpile goods because warehouses would already be packed ready for Christmas.

“Our warehouses start to get pretty crammed during the course of October as we are stockpiling to be able to cope with the Christmas season … there are generally very, very few places you can go and the nature of the supply chain [for toys and other non-food goods] means you can’t really stockpile this kind of item.”

Brexit: UK economy may be shrinking on back of no-deal fears Read more

He said potential delays at ports and the imposition of tariffs could mean difficulties for all kinds of imported products as well as fresh food, which retailers and farmer have long flagged as particularly sensitive to disruption.

Coupe added that a no-deal Brexit was likely to affect the UK’s trading relations with some key countries outside the EU, where most toys and electrical goods are made and where relations are currently governed by EU-based agreements.

The Sainsbury’s boss said he had repeatedly made clear to government officials that a “hard-edged Brexit would be very disruptive to our business and people’s Christmas this year”.

Q&A What does a no-deal or WTO-rules Brexit mean? Show Hide If the UK leaves the EU without a deal it would by default, become a “third country”, with no overarching post-Brexit plan in place and no transition period. The UK would no longer be paying into the EU budget, nor would it hand over the £39bn divorce payment. The UK would drop out of countless arrangements, pacts and treaties, covering everything from tariffs to the movement of people, foodstuffs, other goods and data, to numerous specific deals on things such as aviation, and policing and security. Without an overall withdrawal agreement each element would need to be agreed. In the immediate aftermath, without a deal the UK would trade with the EU on the default terms of the World Trade Organization (WTO), including tariffs on agricultural goods. The UK government has already indicated that it will set low or no tariffs on goods coming into the country. This would lower the price of imports – making it harder for British manufacturers to compete with foreign goods. If the UK sets the tariffs to zero on goods coming in from the EU, under WTO “most favoured nation” rules it must also offer the same zero tariffs to other countries.

WTO rules only cover goods – they do not apply to financial services, a significant part of the UK’s economy. Trading under WTO rules will also require border checks, which could cause delays at ports, and a severe challenge to the peace process in Ireland without alternative arrangements in place to avoid a hard border.

Some no-deal supporters have claimed that the UK can use article XXIV of the General Agreement on Tariffs and Trade (Gatt) to force the EU to accept a period of up to 10 years where there are no tariffs while a free trade agreement is negotiated. However, the UK cannot invoke article XXIV unilaterally – the EU would have to agree to it. In previous cases where the article has been used, the two sides had a deal in place, and it has never been used to replicate something of the scale and complexity of the EU and the UK’s trading relationship. The director general of the WTO, Roberto Azevêdo, has told Prospect magazine that “in simple factual terms in this scenario, you could expect to see the application of tariffs between the UK and EU where currently there are none”. Until some agreements are in place, a no-deal scenario will place extra overheads on UK businesses – eg the current government advice is that all drivers, including lorries and commercial vehicles, will require extra documentation to be able to drive in Europeif there is no deal. Those arguing for a “managed” no deal envisage that a range of smaller, sector-by-sector, bilateral agreements could be quickly put into place as mutual self-interest between the UK and EU to avoid introducing or to rapidly remove this kind of bureaucracy. Martin Belam

Kevin Keaney, the chief executive of cut-price toys and books retailer The Works, said it had brought in products for one of its key Christmas deals five weeks earlier than last year and had increased stocks in stores by 10% as a way to insulate itself against shortages in the run-up to the peak trading period in December.

He said the October deadline was a concern “less so about bringing in stock but about the customer impact and the distraction it may cause”.

Keaney said he was optimistic about Christmas, with the new Frozen film expected to lead to a boom in sales of related products, but he added: “The timing [of the Brexit deadline] for any retailer is particularly unhelpful.”

The Tesco chief executive, Dave Lewis, also warned that planning for the October Brexit deadline was “more difficult” because the supply network would be full of Christmas stock and said the imposition of tariffs under a no-deal Brexit was likely to increase disruption.

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With the potential Brexit difficulties on the horizon, Coupe would not say when Sainsbury’s might be able to turn around its disappointing sales performance.

Sales at established stores, excluding fuel, fell 1.6% in the 16 weeks to 29 June, worse than the 0.9% fall in the previous quarter. Coupe blamed poor weather in comparison with last year’s heatwave and a lack of feelgood events to match the royal wedding in 2018.

Grocery sales fell by 0.5%, a similar level to the previous quarter, but clothing and general merchandise sales dramatically worsened, with falls of 4.5% and 3.1% respectively.