Today is the day the retail world has been waiting for, Super Thursday. After the drip feeding of results over the past week from the likes of Next and Ted Baker (both of which were very positive), today is the day we finally get to see how the wider retail market has performed across the all-important Christmas peak.
BRC and KPMG First, this morning was the British Retail Consortium and KPMG’s retail tracker which showed 0% year on year growth for the month of December despite heavy discounting strategies put in place by many retailers across the month.
The BRC’s Helen Dickinson said "Squeezed consumers chose not to splash out this Christmas, with retail sales growth stalling for the first time in 28 months.
"The worst December sales performance in 10 years means a challenging start to 2019 for retailers, with business rates set to rise once again this year, and the threat of a no-deal Brexit looming ever larger.
"Retailers are facing up to this challenge, but are having to wrestle with mounting costs from a succession of government policies - from the apprenticeship levy, to higher wage costs, to rising business rates."
Marks and Spencer
M&S continued with their decreasing sales trend but the drop was not as sharp as some expected with like for like figures down just 2.4% in the home and fashion divisions. M&S have already outlined their strategies for these divisions with changes focused to making the ranges more appealing to 30-something consumers with updated fashions and an improved mix of products on offer. Changing strategy like this for a company with long lead times on products takes time though and any changes are unlikely to be felt until late 2019, at the earliest.
The food side of M&S also declined in this period by 2.1%, unusual for what is normally a strong growth element for the brand.
Whilst there is unlikely to be a huge celebrations of these results at M&S HQ, considering the difficult trading conditions these results should be taken as a positive sign by the market, already highlighted by an increase in the share price of 2.27% by 10 am.
The focus by Debenhams to make their stores lifestyle-led destinations with blow bars and gyms is in mass market terms a very bold move but the capital investment to roll this out fully is significant and with their current debt position looks to be a very tricky one to see through.
I’ve previously written about how I believe Debenhams is in a very different place to House of Fraser due to their focus on own label brands to differentiate themselves from the market and offer customers a unique experience but, sadly this position seems to be slipping.
Results for peak trading show an increase in their like-for-like losses in previous years with sales down by 5.7% compared to a circa 1.5% decrease last year.
Investors were already betting against the company with the stock the second most shorted in the UK market but these results have just added to the pain with a further 8.49% drop by 10am this morning.
John Lewis was the only one of the three companies to announce an increase in sales on Super Thursday with overall sales up 1% when including performance from Waitrose. There was a particularly strong performance from the retailer's fashion offering with sales in this category rising by 6.7%. Within this Womenswear was a particular highlight with sales rising by 14.7% in this category.
John Lewis slimmed their selection of brands in 2018 and invested heavily in their own brand offering, this strategy is clearly paying off and the results are a testament to this. They have announced that this year might be the first since 1953 that the company might not pay a bonus to their partners, stating that whilst they do have the cash to do so they are unsure if it is prudent in the current conditions.
All of the retailers warned of hard times ahead with low consumer confidence impacting performance and heavy discounting across the sector.
When analysing the Christmas results there is an underlying theme across many of them, the companies with strong brand offerings that have invested heavily in understanding their customer and creating experiences that match their expectations and delivering a product that appeals to them, are the ones most able to buffer the current economic turmoil but the companies who have lost touch with their consumers are struggling to attract consumers to open their wallets!