Christmas trading 2011: results table – Wednesday (and final?) update

25th January 2012

WH Smith traditionally brings the Christmas results season to a close, and here they are, down 6% in the high streets and 3% at their Travel division.  Although this was accompanied by the usual statements about the entertainment categories (CD, DVD, now an infinitesimal part of Smith’s mix), and “resilience”, “challenge” and “cost controls” all made their usual appearances, there was little indicating retail progress.  Strong categories?  Kobo and online?  Former British Bookshops stores?  You can manage a business for cash for so long (and it’s been so long that it’s remarkable), but at some point you have to sell more product, to more customers, more often.  That’s what we want to hear from WHS, and it’s what’s missing again.

19th January 2012

I’ve been on the road for the past couple of days, and quite a few gaps in the table have been filled during that time.  Strong sales from Primark and Matalan indicate that there’s still a desire for value when it’s done well.  Of course, you might say the same about Peacocks, which by all accounts remained operationally profitable, but has been crippled by debt and forced into administration, threatening the biggest one-off loss of retail jobs since Woolworths in 2008.

The Centre for Retail Research in Nottingham has published a sobering schedule, detailing retail failures from 2010-2012.   They state that, over the five years 2007-2011, 173 retail businesses folded, comprising a breathtaking 18,342 stores, and over 150,000 jobs.  Questions please to the CRR -here’s the link.

Back to Christmas 2011, and at the other end of the fashion scale, Burberry and Mulberry have announced excellent growth, but it’s been unclear whether the numbers have referred specifically to UK retail, so I’ve omitted them.

No such qualms with not-retailers-at-all Greene King and JD Wetherspoon.  Looks as though we still have money to spend on a night at the pub!  And animals had a good Christmas, even if their owners cut back, with Pets at Home up 4.9%.

I posted a like-for-like book sales for Oxfam last week, and this has been followed by a flurry of other figures, reported in the Guardian.

Biggest news from the mid-week period has been from the electricals retailers, with Dixons (Currys/PCWorld) hailing -7.0% as a relative success, and Comet’s  -14.5% a reflection of the grim condition of a business struggling through a sale process, and pretty much disowned by Kesa.

However, I think there are good things to be said about Dixons, but they need a separate blog – watch this space…

16th January 2012

Just three additions today – Boots and The Perfume Shop, both looking good; and the McArthurGlen outlet centres, which appear to have had an exceptional season.  It’s worth bearing in mind that Christmas historically has peaked early at outlet “villages” like Swindon and Cheshire Oaks – outlet customers search out the best bargains early, and then complete their shopping in traditional malls and high streets – from memory, the final weekend in November was typically the best in the run-up to Christmas.

Who are we still waiting for?  Of those who made Christmas trading announcements last year: Electricals - Currys/PCWorld and Comet; books/media – WH Smith and Waterstones (though the latter is now privately owned, so is under no shareholder pressure to announce); fashion: Primark, Matalan; DIY: B&Q (though Christmas is hardly a prime season for them, it’d be good to benchmark their performance against Homebase and GCG).

Who would we like to hear from?  Big, successful private businesses like Arcadia and River Island; PE-owned growers like Pets at Home and Hobbycraft; discount grocers like Aldi and Lidl, and bargain retailers like Poundland; niche successes like Jack Wills and Cath Kidston; mega-brands like Selfridges…  It’s a long list, and any analysis of published numbers is inevitably just a snapshot of a sector which is far less plc-dominated than in the past.

13th January 2012

A quick final update before the weekend is upon us.  Has Tesco had enough press coverage?  As Twitter noted last night during News at Ten, you’d think they’d called in the administrators…  Still, Philip Clarke has been very candid about the challenges Tesco faces, and has been reminded (as The Times editorial today emphasises) that no company stays at the top forever.  I’m thinking hard about Tesco Extras, and a separate blog might follow…

Nils Pratley on The Trouble at Tesco

Harry Wallop on Is This the End of Tesco Dominance? (QTWTAIN)

Meanwhile…  Good numbers from Original Factory Shop, The Entertainer and Superdrug, but another tough season for Theo Fennell.  Nul points to Asda and Ted Baker for announcing total growth for Christmas, but not like-for-likes.  Of course, I appreciate they don’t have to announce anything at all, but if I had shares in Wal-Mart, I’d want to know what was what.

12th January 2012

After a positive start to the week, things have turned ugly with poor results from Tesco spooking the markets, and throwing fresh doubt over the sector.

As you can see from the table above, Tesco has performed significantly worse than other supermarkets (and M&S food, which has been broken out separately in reporting, and which saw a like-for-like increase of 3%).

House of Fraser has posted some remarkably good numbers, but it isn’t clear whether they’re inc or ex-VAT.  For the record, I’m a committed ex-VAT person – including a variable rate of tax in your sales is no way to accurately reflect like-for-like shopper behaviour.

(At Borders, 75%-80% of our sales were VAT-free – books, newspapers and magazines – and the remainder was VATted – stationery, CDs, DVDs, toys etc.  We also paid a “special rate” of VAT, where eg a CD-ROM was attached to a book on computing or language learning, which reflected the fact that part of the whole product was zero-rated.  I’d like to think that the HMRC officers required to create and police these rules, and audit the proceeds, cost rather more than the total tax take.)

Anyway, back to Christmas 2011, and as expected, times were tough at the likes of Halfords, Thorntons and Mothercare.  Argos had a particularly grim set of results – for how long will 750 stores be sustainable?

Some more variances to reporting periods, highlighted in green.  These were the reporting periods twelve months ago:

  • Tesco LY: 6 weeks to 8th January
  • JD Sports: 5 weeks to 1st January
  • New Look: 15 weeks to 8th January
  • House of Fraser: 5 weeks to 8th January

FTSE 100 retailers are now shown in bold.

10th January 2012

Plenty of results added to today’s table, including a couple of outriders that you may not have seen reported elsewhere!

Game takes over at the unhappy end of the chart; their LY numbers are highlighted because of a change in reporting period – for 2010, they reported five weeks to 8th January, this time around, an additional three weeks pre-Christmas were included.  The Co-op also made a change – the prior year numbers relate to a 13 week period, October – December.

There’s some inc-VAT (Debenhams) and ex-VAT (Majestic) differentiation, which given the rate jump from 17.5% to 20% has a bearing on different companies’ numbers.  And of course, these are just sales – not profits.  The rumbling undercurrent – “of course, their margins will have taken a hit” - accompanies many of these announcements.

Nevertheless, it’s great to see many more pluses than minuses on the schedule – long may it continue…

9th January 2012

And they’re off.

It looks as though this year, every media source and his dog is going to be publishing regular updates on Christmas trading, so I’ll keep this brief, and update it as required.

I’ve included last year’s numbers, where I have them – and as this is a busy office, I haven’t dug out LYs where I previously didn’t have them – I’ll try and infill if Edwin Drood becomes unwatchable.

Worth noting that, where comparisons exist, the order of companies is exactly the same as last year.  (The reporting periods are all similar, so these are good comparisons.)

It’s worth remembering that bad results always take longer to calculate than good ones…

And for the many hundreds of you who enjoyed my “8o towns” blog from last week, I’ve shown store numbers.  Counting stores is always an inexact art, but most of the chains are on multiples of eighty.  Some will stay that way – supermarkets, Next.  But there’s restructuring in the air.

Just to keep us all honest, this article from the Telegraph highlights some of the more imaginative ways that Christmas performance can be characterised.

And, lest we forget, the following chains probably won’t be providing Christmas trading updates:

Barratts Priceless, Blacks, D2 Jeans, Hawkins Bazaar/Tobar, La Senza, and Past Times.  Ask not for whom the bell tolls, but let’s hope stores can be rescued, and jobs maintained.

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Walking on the retail volcano

Robert Peston, the BBC’s Business Editor and, judging from his output, a man who never sleeps, has written an interesting piece about the retail recession, which draws on ITEM/EY’s gloomy prognosis of ten fallow years, published a couple of days ago.

Peston’s argument is that the initial financial crash in 2008 caused a few high-profile retail failures (Woolworth etc), but that increases in benefits and tax credits kept households afloat through 2009-10.  All this is now changing, however, as real income falls, inflation rises, the job market tightens, and state payments decrease.  The high street has been through pain, but not real suffering – that is yet to come.

There is certainly no shortage of news on the high street.  Peston’s Premise is borne out by the final collapse of Focus DIY – although there is some good news is that many of its stores are being taken over by more robust competitors.  But companies and brands that aren’t best in sector, and that aren’t the consumer’s first choice, are going to strggle in the years ahead (notwithstanding the inevitable consumer pump-priming that will precede the next election in 2015).  Look at the angst in the electricals sector – Kesa/Comet, DSG and Best Buy all have “issues”, and all are being steadily eroded by their online competitors.  Changes will come.

Elsewhere on the rumbling volcano there are “Icarus” brands, who have experienced massive growth but who are now attracting questions.  Superdry is under the analysts’ microscope, and no surprise, as its huge sales growth has been driven by a breathtaking store roll-out programme.  It’s one of those odd brands, however – like Fat Face, it sells youthful clothes for older people, and the brand is now too ubiquitous to appeal to the genuinely trendy teens and twenties.  I was in St Ives last month, and Superdry had one of the largest retail footprints in the town.  Customers, however, were uniformly in their 30s and 40s, and these are the people whose wallets will be squeezed over the next couple of years.  Building your business on a high level of store openings, trusting that central costs can be mitigated and growth assured, is not a great strategy - I know that from experience, and so do those behind Warner Bros Studio Stores, Dillons, Big W… etc etc.

If we’re going to have tough times ahead, consumers are going to be looking for value, but they’re going to want retailers they can rely on as well.  We’ve moved on from the low-price fixation that benefited Primark so hugely (though pound shops etc will continue to prosper).  The public now wants longer-term value – eg clothes they can wear more than once.  They’re looking for reliability, quality in manufacture, and they’re looking for retailers and products they can trust.

This middle-ground is epitomised by John Lewis, M&S and Next – brands that will never be too exciting, but that have the value/quality/price proposition in balance.  These companies are also viewed as being good corporate citizens – they play by the rules, they look after their staff, they pay their taxes.  I think this last item is going to become a hotter issue in the months ahead – the lava is warming up, ready to break through the crust.  There is a nice, long-running journalistic thread to be built out of companies that avoid UK taxes (note, avoid, not evade).  If “we’re all in this together”, then Boots will have to prove that they are playing the role that the public expects; but as a PE investment, there is inevitably the risk of conflict with their investors’ goals.  This could be profoundly damaging for Boots’ 150-year old credibility and trust - fairly or otherwise.

So, Rip-Off Britain could be back, but this time it’ll be about ripping off all of us (the “Big Society” – is anyone still talking about that?), rather than the individual consumer.  This sort of headline sets the tone – and it’s in the quality press.

Gerald Ratner was on the TV last night, the only company boss so far to have the guts to speak for himself on Evan Davis’s clattery but compelling Business Nightmares show.  20 years on, he is still understandably bemused by the scope of his fall from grace – to have your family name turned into a noun synonymous with “cock-up” is hard to live down.  Ratner today is honest and engaging; the point was made that his price-slashing showmanship was ideal for the go-go 80s, and completely wrong for the more austere early 90s.  As the public mood entrenches and the true cost of the banking crisis comes home to households across the country, other retailers need to take care as they pick their way across the volcano.

Luckily, however, everything is going to be alright, as Mary Portas has been appointed to to carry out a government-backed review aimed at halting the “decline of the High Street” in England.  This looks horribly like an Alan Sugar-type “eye-catching initiative” – doesn’t Stuart Rose have time on his hands at the moment? – and I hope that the review concentrates on accessibility, occupancy costs and online impact, rather than picking up on the horror show aspects of Portas’s C4 series.  The good news is that the problem has been recognised by the government – let us hope that the celeb approach can do some good this time around.


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