UK retailers reveal Christmas results
Department store chain John Lewis and discounter Aldi emerged as winners yesterday after British retailers fought it out for every pound in a tough Christmas.
Elsewhere Tesco showed signs of life, Next proved as reliable as ever, while Marks Spencer was left looking embarrassed when its poor results were leaked a day early.
In a fiercely competitive festive season, few British retailers emerged triumphant, with even some strong performers posting growth well below inflation. Those that did well had a breadth of products, a range of customers and multiple channels – or cheap prices.
Department store chains John Lewis and Debenhams both lured record numbers of customers to their shops and websites.
Next, which has a longstanding policy of not discounting before Boxing Day, also raised its yearly profit guidance after solid trading.
Some retailers were also hampered by the fact that many Britons left it to the last weekend to do their shopping, in the hope major chains would buckle under the pressure and launch sales before Christmas.
Among grocers, budget group Aldi stood out with growth of 30 per cent in the British market, in contrast to previous years when shoppers saw the holiday season as an excuse to upgrade to a more expensive outlet.
For those who could afford to splash out, the upmarket John Lewis-owned Waitrose proved popular, outshining the performance of the so-called big four of Tesco, Wal-Mart’s Asda, Sainsbury and Wm Morrison.
According to market research by Kantar Worldpanel, Sainsbury was the only big four grocer to win market share as cash-strapped shoppers homed in on its cheaper own-brand products, online offerings and local stores.
Market-leader Tesco, a year on from a dismal Christmas that prompted its first profit warning in two decades, posted its strongest growth in three years as it showed the benefits of a £1 billion turnaround plan.
“In the UK I think we were back on form,” said chief executive Philip Clarke. “Whilst our seasonal performance is encouraging, there is a lot more to do.”
Sainsbury reported like-for-like growth in its third quarter of 0.9 per cent, while Tesco posted 1.8 per cent in the six weeks to January 5th. But with inflation running at 2.7 per cent, that left both with negative real growth.
Shares in Tesco rose 2.3 per cent to their highest in a year, but analysts and investors cautioned that the solid growth partly reflected easy comparative numbers.
“The expression ‘one swallow doesn’t make a summer’ comes to mind,” said one top 20 investor in Tesco. “Have you been in a Tesco store recently and noticed a difference in the offering? Because I haven’t.”
MS, best known for reasonably priced but high-quality staples such as socks and underwear, saw third-quarter underlying sales of clothing, footwear and homewares fall a worse-than-expected 3.8 percent.
The update was rushed out late on Wednesday after being leaked to a broadcaster. Chief executive Marc Bolland told reporters he was confident steps being taken by a new general merchandise management team would address problems in the area.- (Reuters)