The weeks leading up to Christmas are traditionally lucrative for high street and online stores but they also reveal which retailers are doing better than others. As firms report their sales figures, the winners and losers are emerging. This year most of them are winners, with the notable exception of Next.
The fashion and homewares chain was the first to report how it fared over the festive period but its trading update was so dismal that it dragged down shares across the retail sector.
The retailer warned of lower-than-expected profits this year and a tough 2017 ahead as a result of rising inflation and shoppers switching away from buying clothing.
Marks & Spencer
Marks & Spencer had its its best Christmas in six years, bringing to an end the prolonged fall in clothing sales. Like-for-like clothing sales rose 2.3% in the 13 weeks to 31 December – a far cry from the 6% fall a year earlier.
It was Steve Rowe’s first Christmas as boss of M&S, and he said “better ranges, better availability and better prices” helped reverse the fortunes of its clothing business. Like-for-like sales within its ever-popular food division increased by 0.6%. The results were boosted by an extra five days in the trading period compared with last year. Excluding those days, clothing and food sales were still higher, by 0.8% and 0.3% respectively.
John Lewis warned staff they would get a lower bonus this year, even though sales and profits have risen. Like-for-like sales at its department stores rose by 2.7% in the six weeks to 31 December, while Waitrose’s like-for-like sales were up by 2.8%, boosted by one-day promotions for Christmas staples such as champagne and crackers. But John Lewis pointed to the “challenging market outlook and the importance of investment for the future” to justify paying a bonus that is likely to be significantly lower than last year.
The supermarket enjoyed its best Christmas in seven years, after it revamped its premium ranges, opened more tills and cut fewer prices.
David Potts, the Morrisons chief executive, said the UK’s fourth largest supermarket had found its “mojo” as the retailer reported a 2.9% increase in like-for-like sales excluding fuel in the nine weeks to 1 January. Fresh fruit and vegetables, beers, wine and spirits, and Morrisons’ new upmarket The Best range all did well, while sales of the Nutmeg clothing range rose 30%.
Britain’s second biggest supermarket chain surprised the City with a record Christmas and its first sales growth since March last year.
Growth was modest, at 0.1% on a like-for-like basis excluding fuel in the 15 weeks to 7 January, but it was better than the 0.8% drop in sales analysts’ were expecting. Like-for-like sales at Argos – bought by Sainsbury’s last year – rose by 4%, more than double the rate forecast by the City.
Sainsbury’s boss Mike Coupe said the retailer’s Christmas performance reinforced the logic of its £1.4bn takeover of Argos. Grocery sales were boosted in supermarkets containing Argos outlets.
Britain’s biggest supermarket said sales of food, clothing and toys all rose over Christmas. Sales at stores open for more than a year grew by 0.7% in the six weeks to 7 January, which was slightly better than the City expected. Tesco boss Dave Lewis said the improvement was driven by better customer service and product ranges. Highlights included party food, with sales up 24%, premium wine, up 20%, and Free From specialist allergy-free foods, up 18%.
However, shares fell following the update, because the retailer’s international performance was a disappointment.
Total UK sales for December at the German discount chain were up 15% on a year earlier, helped by strong demand for festive vegetables, prosecco and its premium products such as “specially selected” mince pies. The company said it was stealing a march on upmarket rivals Waitrose and M&S.
The rival German discounter’s sales rose 10% in December year on year, as it opened new stores and lured shoppers with its mix of bargain prices and luxury foods. Lidl sold 200,000 lobsters over the Christmas period thanks to a savvy social media campaign, and cut the price of mini stollen, Serrano ham and sliver-topped Christmas puddings.
Bumper sales of gin and sparkling wine helped Majestic to its “biggest ever” Christmas. Gin sales jumped 55% compared with the previous year, with upmarket products such as Warner Edwards rhubarb gin and Sipsmith sloe gin performing particularly well. Sparkling wine sales rose 12%, with sales of prosecco increasing three times faster than champagne.
Sales at established Majestic Wine stores (those open for more than a year), rose 7.5% in the 10 weeks to 2 January, comfortably beating expectations. Strong growth within its Naked Wines and Lay & Wheeler businesses helped to drive overall group sales up 12.4%.
Debenhams has reported better than expected Christmas trading as customers clamoured for beauty products and gifts. Like-for-like sales grew by 5% in the seven weeks to 7 January and were up 1.7% at constant exchange rates. Analysts had expected a 1% drop in sales. The retailer has cut back on promotions to boost profit margins.
The discount chain’s owner Associated British Foods, said trading across its business was “good” in the last 16 weeks. It did not release like-for-like figures for Primark, but total sales were up 11% year on year in constant currency terms, or a chunky 22% in actual currency terms (thanks to the sharp fall in sterling since the Brexit vote).
JD Sports expects to beat City forecasts for full-year profits, sending its shares to an all-time high. Headline profit before tax and one-off items is set to exceed expectations of £200m by up to 15% thanks to bumper sales – up 10% on a like-for-like basis in the 49 weeks to 7 January. JD has overtaken rival Sports Direct as the UK’s biggest sportswear retailer by market value, but both companies face growing pressure over poor working conditions at their warehouses.
The baby goods retailer returned to growth in the third quarter following a surge in online sales. Total sales for the 13 weeks to 7 January rose by 0.6%, boosted by a 5.5% rise in internet sales. The company said online sales now account for about 40% of all UK sales. Sales at stores open for more than a year increased by 1%.
Mark Newton-Jones, chief executive, said the company had focused on improving its product range and selling goods at full price. It also better managed its stock levels, so that it entered the end-of-season sale with less stock than the previous year.
Discounter B&M celebrate a bumper Christmas trading period as cautious shoppers looked to save money.
Sales rose 7.2% at the group’s UK established stores in the 13 weeks to Christmas Eve, with 1.1% of that lift coming from an extra day of trading. Sales of gifts, decorations and confectionery performed particularly well according to the company, chaired by former Tesco chief executive Terry Leahy.
Online electricals retailer AO World achieved decent sales growth over Christmas, but struck a cautious note about the months ahead, citing “the uncertain UK economic outlook, currency impacts on supplier pricing and the possible effect on consumer demand.”
Total revenues in the three months to 31 December were up 12.3% year on year. Analysts at consultancy Verdict Retail said while growth has slowed considerably since last year, AO is still gaining significant market share in a sector that has been in decline for the majority of 2016, and remains undeterred from its expansion plans.
Sales at the charity surged to a five-year high as shoppers snapped up secondhand clothes and ethical gifts such as Fairtrade chocolate and coffee. The charity posted a 10% year-on-year rise in sales for November and December to £17.2m. “Virtual” gifts, such as providing safe water for a small community, were popular, with a 9% rise in sales.
The retailer behind the Superdry clothing brand enjoyed a very strong Christmas, with revenue jumping 21% in the 10 weeks to 7 January. The company, which features clothing co-designed by the actor Idris Elba, said it benefited from its store extension programme and a weaker pound, because an increasing proportion of its revenues come from outside the UK. Like-for-like sales, in stores open for more than a year increased by 14.9%.
The online fashion retailer aimed at 20-somethings had a bumper Christmas, with UK sales up 18% international sales up 52% (helped by the weakness of the pound) in the four months to the end of December. Asos is now expecting sales for the full year to rise by between 25% and 30%, boosted by the strong festive trading period. Nick Beighton, the Asos chief executive, said the company would invest more money in the upgrade of its systems and processes in order to meet the swelling demand for its clothing ranges.
This article was sourced from http://news3az.com