Gloom dominates UK Christmas retail reports

With roughly half of the UK Christmas retail reporting season now passed, the picture is one of general gloom.

With roughly half of the UK Christmas retail reporting season now passed, the picture is one of general gloom.

Figures released today by industry lobby group the British Retail Consortium (BRC) compounded a pessimistic mood. The BRC said December same-store sales had fallen at their fastest rate in almost two years, although the story is rather more complex.

While this measure was down 0.4 per cent in what BRC director-general Mr Kevin Hawkins called the "worst Christmas in living memory," total high-street sales increased by 2.5 per cent, roughly on a par with economic growth.

Topping the disappointment league is Marks & Spencer. Labouring under the legacy of several seasons of ill-advised fashion and homewear collections, M&S warned on profits as Christmas same-store sales dropped 5.6 percent.

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The fashion sector in general has performed weakly, with one or two exceptions such as discount out-of-town chain Matalan, which bounced back from a very poor Christmas 2003 to report a 5.3 percent same-store sales increase.

Unlisted New Look did even better at 11.6 per cent, although many others, including Alexon, House of Fraser, and JJB Sports, actually saw a fall in like-for-like turnover.

Even Next, long the analysts' non-food favourite, put in a performance some saw as disappointing. Acknowledging that its menswear lines had not hit the mark during the autumn, Next posted just 2.9 per cent growth for the August to December period.

Strong performers included wine and beer seller Majestic and upmarket foodseller Waitrose, while Asda said it had enjoyed a record Christmas.

Tesco, which publishes data on January 18th, could well have accounted for all the spending growth on the high street, with Christmas same-store sales seen around 8 per cent higher.

Tesco, along with Argos owner GUS, which reports on Thursday, could go a long way to "rescuing" the UK retail Christmas, but the real headline-grabbers could be elsewhere.

Sainsbury will possibly be the most closely-studied retailer of this reporting season. Analysts screening the results on Thursday will be looking for signs that CEO Justin King's recovery plan is beginning to pay off - or not.