British retailers report better-than-expected Christmas performance

John Lewis warns staff bonus may be significantly lower due to challenging outlook

 Marks and Spencer on Oxford Street, London: One of the UK retailers to report better-than-expected performance over the Christmas season. Photograph: Jonathan Brady/PA Wire

Marks and Spencer on Oxford Street, London: One of the UK retailers to report better-than-expected performance over the Christmas season. Photograph: Jonathan Brady/PA Wire

 

British retailers have been toasting a better-than-expected Christmas as this week’s flurry of updates confirmed shoppers were happy to splash out over the all-important festive season.

Established brand names had a good season, but it is the performance of discounters Aldi and Lidl that stand out. However, John Lewis warned that its staff bonus may be lower than last year due to tougher times looming.

Figures from supermarket giants Tesco, Morrisons and Sainsbury’s and high street stalwarts Marks & Spencer showed the sector enjoyed impressive trading.

Fears sparked last week by Next’s dismal performance have proved unfounded as the chain emerged as the only major loser over the all-important shopping season. But it has joined rival John Lewis in warning of a bumpy ride ahead as rising prices from the weak pound and lacklustre wage growth threaten to bring the consumer spending boom to an end.

Tesco, the UK’s biggest supermarket joined the list of festive winners after reporting a 0.7 per cent rise in UK like-for-like sales over the six weeks to January 7th and notched up a 1.8 per cent rise in third quarter sales.

Sainsbury’s and Argos Sainsbury’s posted a 0.1 per cent rise in like-for-like sales excluding fuel in the 15 weeks to January 7th, which beat forecasts for a small fall in sales.

Primark boost

Associated British Foods which owns Primark, known as Penney’s in Ireland, said sales at the retailer jumped 22 per cent in the 16 weeks to January 7th thanks to a boost from the Brexit-hit pound and a 16 per cent increase in selling space. Like-for-like sales for the period were also “good”, according to AB Foods.

Morrisons hailed its strongest festive sales growth for seven years after it saw a 2.9 per cent hike in like-for-like sales excluding fuel for the nine weeks to January 1. The sales cheer saw Bradford-based Morrisons hike its full-year profit expectations.

Discounter Lidl said sales increased 10 per cent over December in its best ever Christmas sales performance. Close rival Aldi also welcomed record trading, with total UK sales more than 15 per cent higher year-on-year in December.

M&S revealed a return to sales growth in its embattled clothing arm for the first time in nearly two years. Like-for-like sales in its clothing and home division rose 2.3 per cent in the 13 weeks to December 31st. The group also posted a 0.6 per cent rise in like-for-like sales across its food halls. But the performance was boosted by five extra trading days and came against an exceptionally poor performance from a year earlier.

Staff bonus

The employee-owned group John Lewis warned its renowned staff bonus may be “significantly lower” than last year in the face of a challenging market outlook. The blow came despite strong Christmas trading as John Lewis department stores reported a 2.7 per cent rise in like-for-like sales in the six weeks to December 31st, while Waitrose saw a 2.8 per cent increase.

Next, which had sounded the alarm on trading before Christmas suffered a 3.5 per cent fall in full-price sales across its high street stores in the 54 days to Christmas Eve, but a better performance from its Directory catalogue arm helped limit the overall decline to 0.4 per cent.

Debenhams said strong demand for its beauty and gift sections helped like-for-like sales rise 3.5 per cent in the 18 weeks to January 7th .

Department store chain House of Fraser said surging online demand helped lift festive sales by 2.7 per cent over the six weeks to December 31st.

Smaller players on the UK high street also joined in the Christmas cheer, such as Mothercare, which enjoyed a return to UK sales growth; JD Sports Fashion, which said full-year profits would beat expectations by up to 15 per cent after stellar trading; upmarket fashion brand Joules; online fashion retailer ASOS; and fashion chain Ted Bake

– PA