Retail giants Tesco and John Lewis have added to the list of festive winners after posting solid sales, but Marks & Spencer joined a raft of casualties hit by tough high street trading and consumer belt-tightening.
This week’s flurry of updates confirmed it was once again a highly-competitive Christmas for retailers, with online sales proving a key battleground and squeezed shoppers spending cautiously.
While supermarkets generally enjoyed robust food sales, it was otherwise volatile with many clothing chains resorting to heavy discounting to offset tougher trading.
A profit upgrade from Next and contrasting earnings alert from Debenhams last week set the scene for a mixed performance and the latest clutch of sales reports show it was by no means a jolly Christmas for all.
Here we look at the retail winners and losers.
Britain’s biggest supermarket delivered a solid performance, with UK like-for-like seasonal sales up 1.9%, driven by a strong grocery performance. This helped Tesco notch up a 2.3% rise in third quarter comparable sales. Food sales grew 3.4% on a like-for-like basis over Christmas, and the only blot was a drag from a 0.6% decline across general merchandise and tobacco sales, which the firm blamed on the collapse of wholesaler Palmer & Harvey.
But shares fell as the sales hike missed expectations.
:: Sainsbury’s and Argos
General merchandise was also the Achilles heal for Sainsbury’s as it reported a 1.1% rise in like-for-like sales over the 15 weeks to January 6. It upgraded its full-year profit forecast following the solid overall performance, but saw non-food sales, including Argos, fall 1.4% and warned of a challenging market.
Morrisons was a stand-out performer among the Big Four thanks to surging sales of its premium range and efforts to keep a lid on prices. It said group like-for-like sales excluding fuel jumped 2.8% in the 10 weeks to January 7, with retail sales up 2.1% and wholesale 0.7% ahead. It said it enjoyed an “especially strong” festive season as sales picked up pace in the last seven weeks, up 3.7% across the group.
:: Discounters Aldi and Lidl
Lidl claimed it was the “fastest growing supermarket” over Christmas after booking a 16% leap in festive sales in December, although it did not give a breakdown of like-for-like sales. Fellow German chain Aldi also notched up a double-digit rise, helping it rake in over £10 billion in turnover last year for the first time as festive shoppers snapped up luxury products and cut-price vegetables. It said total UK sales were more than 15% year-on-year during December.
:: John Lewis Partnership
Department store John Lewis shrugged off any gloom with a 3.1% hike in sales over the six weeks to December 30, while its sister company Waitrose booked a rise of 1.5%. But the hike was not enough to prevent the impact of soaring costs and price cuts to remain competitive against its rivals as it confirmed full-year profits were still expected to be hit.
Next surprised with an impressive set of figures and profit upgrade thanks to bumper online sales at its Directory arm, having otherwise suffered a tough 2017. Next said full-price sales in the 54 days to December 24 increased 1.5%, with online sales jumping 13.6%, helping mitigate a 6.1% decline across its stores.
:: Marks & Spencer
Retail bellwether Marks & Spencer blamed unusually warm weather in October for a 2.8% fall in like-for-like clothing and home sales over the 13 weeks to December 30. Its food sales also disappointed, down 0.4%, as it admitted the division was suffering “ongoing under-performance”. It insisted both divisions saw better trading in the key Christmas weeks.
Department store chain Debenhams was among the first to emerge as a festive casualty after warning over profits after it was forced to slash prices to boost flagging festive sales. It saw UK like-for-like sales tumble 2.6% in the 17 weeks to December 30, although “tactical promotional action” helped group sales improve over the six-week Christmas period, rising by 1.2% on a like-for-like basis.
:: House of Fraser
House of Fraser was another to reveal festive trading woes as it saw store sales slump 2.9% in the crucial six weeks to December 23 after resisting pressure to discount outside of Black Friday. The embattled group also said online sales tumbled 7.5% as it continued to suffer disruption after the recent launch of a new web platform.
:: Other retailers
The uneven performance also played out among the smaller players, with profit warnings from the likes of Moss Bros and Mothercare after they saw sales plummet.
But there was also plenty of cheer, with sales leaping at Ted Baker, upmarket fashion brand Joules and FatFace. SuperGroup gave some cause for concern as it pointed to easing sales growth in the run-up to Christmas after a stellar previous quarter, and elsewhere there was a robust performance from Majestic Wine thanks to strong sales of English fizz.