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Christmas wasn't that bad, admits BRC

London, UK (10/01/2012)

LONDON (Management Today) Retailers say all that doom and gloom before Christmas may have been over the top. Hence, presumably, Marks & Spencer's optimistic results.


It’s official: the British Retail Consortium says UK retailers didn’t have as terrible a Christmas as they had been expecting. According to a survey by the organisation, UK retail sales in December were 2.2% higher than this time last year, when sales had dropped by 0.3% (although to be fair, icy conditions weren’t exactly conducive to a jolly festive shopping season). In fact, excluding ‘Easter distortions’ (ie. out-of-control bunting sprees in the run-up to the Royal Wedding), December’s performance was the best since January.

Take, for example, Marks & Spencer, which posted impressive Christmas trading results this morning: sales at the chain were up 3% on a like-for-like basis excluding new store openings – that’s almost twice the 1.5% analysts had been expecting. CEO Marc Bolland put the rise down to clever planning: ‘we saw from customer research in the past that (people) really wanted to have a good Christmas at home,’ he said.

Thus, while its competitors advertised their budget mince pies, luxuries like salted caramel profiteroles (its best seller) and pork crackling straws flew off M&S’ shelves. In fact, the company apparently sold more than 6m packs of party food, despite their premium price tags. No wonder analysts at Shore Capital said its performance had been ‘exccellent’.

It was a slightly different story at M&S’ general merchandise (read: clothing and homeware) arm, mind. Sales dropped by 1.8% over the 13 weeks to the end of December – which is even worse than the 1.5% decline analysts had originally predicted. Not good, particularly considering poor sales pushed it to begin discounting weeks before it usually would over the festive season. So the fact that its clothing sales crept up by 1.1% suggests it needs to take another look at the designs it’s got on offer.

Homewares sales also plummeted, by 13.3% – although Bolland pointed out that that was partially to do with M&S’ decision to take electrical items like TVs off its shelves. ‘There is hardly any margin in that market for retailers’, he explained. So at least that figure isn’t quite as bad as it seems.

Elsewhere on the high street, Majestic Wines announced strong results, with total UK store sales excluding VAT rising by 8.4% for the nine weeks to the beginning of January, pushing like-for-like sales up by 4%.

Of course, it isn’t the same story for all retailers: just yesterday, HMV posted decidedly gloomy results, while Blacks went into administration just this week. So perhaps this just suggests that when the chips are down, people are perfectly happy to cut back on everything from clothes to DVDs – but over Christmas, they’re a lot less willing to scrimp on booze…

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