The weeks leading up to Christmas are traditionally lucrative for high street and online stores but they also reveal which retailers are faring better than others. This year most of the biggest retail names had a good festive season - with fashion chain Next the biggest loser.
Next
The fashion and homewares chain was the first to report how it performed over the festive period but its trading update was so dismal it dragged down shares across the retail sector.
Full price sales in Next’s stores dropped by a far-worse-than-expected 3.5% in the weeks leading up to Christmas even though the retailer has opened new stores. The annual winter sale – which starts at 5am each Boxing Day – was also disappointing, with sales down 7%. Directory sales, almost all online, rose by only 5%.
The retailer warned of lower-than-expected profits this year and a tough 2017 as a result of rising inflation and shoppers switching away from buying clothing. But rivals did much better and analysts have started questioning whether the fashion ranges are to blame.
Marks & Spencer
M&S had its its best Christmas in six years, ending the prolonged fall in clothing sales. Like-for-like clothing sales rose 2.3% in the 13 weeks to 31 December – a big improvement on the 6% fall a year earlier.
It was Steve Rowe’s first Christmas as chief executive of the retailer, and he said “better ranges, better availability and better prices” helped reverse the fortunes of its clothing business. The store’s Christmas TV advertising, featuring Santa’s wife making an emergency present delivery, was also credited with helping sales: “Mrs Claus was fabulous”, said Rowe. The store sold more than 5,000 copies of the red M&S dress worn in the ad by Mrs Claus, played by actress Janet McTeer.
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
John Lewis warned staff they would get a lower bonus this year, because even though sales were ahead the group’s operating profit will be lower as a result of pressure on prices and higher costs. 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%.
Morrisons
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 did well, while sales of the Nutmeg clothing range rose 30%.
Sainsbury’s
Britain’s second biggest supermarket chain surprised the City with a record Christmas and its first sales growth since March.
The growth was modest - just 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 City analysts were expecting. Like-for-like sales at Argos – bought by Sainsbury’s last year – rose by 4%, more than double the City forecast.
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.
Tesco
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, slightly better than the City expected. Tesco chief 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 because of the retailer’s disappointing international performance.
Aldi
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 premium products such as “specially selected” mince pies. The company said it was stealing a march on upmarket retailers Waitrose and M&S.
Lidl
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 silver-topped Christmas puddings.
Majestic Wine
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%.
Fortnum & Mason
The luxury department store group posted 16% like-for-like sales growth for the five weeks to 1 January, as shoppers stocked up on tea, hampers, caviar, smoked salmon and white truffles. Growth was underpinned by online sales, up by 22% on 2015, with Fortnum’s products dispatched to 121 countries in the run-up to Christmas.
The bakery department contributed a 23% increase while some tea ranges more than doubled in sales and sales of hampers, one of Fortnum’s staples in the Christmas period, climbed 19%. Footfall at the flagship store in Piccadilly, central London, rose 10% as the weaker pound brought more international visitors to the capital.
Debenhams
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. The retailer has cut back on promotions to boost profit margins.
Primark
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
The trainer and sports fashion retailer 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 Sports Direct as the UK’s biggest sportswear retailer by market value, but both companies face mounting pressure over poor working conditions at their warehouses.
Mothercare
The baby goods retailer returned to growth in the third quarter after 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 online 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.
B&M
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.
AO World
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 which has been in decline for most of 2016, and remains undeterred from its expansion plans.
Oxfam
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.
SuperGroup
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%.
Asos
The online fashion retailer aimed at twentysomethings had a bumper Christmas, with UK sales up 18% and 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 firm would further upgrade its systems and processes to meet the growing demand for its clothing.
Hotel Chocolat
Customers visited the luxury chocolatier’s website and shops in greater numbers than the previous year over the Christmas period. They not only bought more items, but more higher-priced items, lifting sales by 16.2% in the 13 weeks to 25 December. Angus Thirlwell, co-founder and chief executive, said being a UK manufacturer gave the company flexibility to maintain good stock availability right up to the end of the season.
