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Was it a Happy Christmas for UK retailers?

Danny Cox | 2 January 2018 | A A A

You’re about to read press releases, which we’ve written for media use only. They’re not intended for individual investors. They’re not personal advice and don’t include any recommendations.

No recommendation

You’re about to read press releases, which we’ve written for media use only. They’re not intended for individual investors. They’re not personal advice and don’t include any recommendations.

Media contact:

Danny Cox

Head of Communications

Direct Line: 0117 317 1638

Mobile: 07989672071

The festive season is a key trading period for the UK retail sector, and over the next couple of weeks we’ll get a picture of whether the consumer squeeze of 2017 dented Christmas sales, or whether shoppers carried on regardless.

Below are the dates of some of the key announcements from UK listed retailers, giving us an update on Christmas trading conditions.

Thankfully we don’t have a repeat of last year’s super Thursday, when half a dozen big retailers all decided to post their updates on the same day.

However 11th January promises to be a crunch day this year, with Tesco, M&S, John Lewis and Debenhams reporting, so by that date we should have a good idea of whether it was a happy Christmas for the UK retail sector.

Christmas trading calendar

3rd Jan Next
9th Jan Morrisons
10th Jan Sainsbury
Ted Baker
11th Jan Tesco
M&S
Debenhams
John Lewis
16th Jan Dunelm
JD Sports
18th Jan Associated British Foods (owner of primark)
23rd Jan Dixons Carphone
24th Jan WH Smith
25th Jan ASOS

Three retailers in focus

Next set the tone for 2017 when it warned that rising inflation was putting the brakes on consumer spending. This proved to be prescient, and added further woes to high street retailers already battling to cope with the relentless rise of online shopping.

Customers shifting from the high street to the web presents Next’s Directory division with an opportunity, but the rise of online-only players like Boohoo and ASOS means picking up online sales is no formality, while more traditional retailers are also upping their digital game. We’ll be interested to see what impact recent upgrades to Next’s mobile and online offerings have had on this part of the business.

With online taking share and in-store sale in reverse, it may seem odd for Next to continue opening new stores. However CEO Lord Wolfson reckons the costs can be recovered within two years and that physical stores are actually complementary to growing online sales because they offer customers a convenient location for collection and returns.

Next is traditionally the first out of the blocks with its Christmas trading update, and sure enough it reports on 3rd January this year. If it has struggled through the festive period, that doesn’t bode too well for the rest. On the flip side, signs of a better than expected performance could lift spirits across the sector.

Tesco saw the green shoots of recovery coming through last year, allowing the company to resume dividend payments after a three year hiatus. It also implemented a compensation scheme to shareholders affected by the 2014 accounting scandal.

For Tesco the challenge in 2018 begins with a ‘B’, but isn’t Brexit. The £3.7 billion takeover of Booker Group got the green light from the competition regulator shortly before Christmas, and Tesco now intends to complete the deal in March, following a shareholder vote in February.

The supermarket sector is having to re-invent itself, with Sainsbury’s taking over Argos, and Morrisons teaming up with Amazon and McColl’s, so Tesco doesn’t want to rest on its laurels while its peers move onwards and upwards.

The problem is some large shareholders have publicly voiced their concerns over the deal. Tesco has just got back to its feet, and the worry is the supermarket is trying to run before it can walk again. A good Christmas trading update would mean CEO Dave Lewis can approach the forthcoming vote from a position of strength. However a poor performance over the festive period would unsettle shareholders’ confidence in the deal.

M&S – performance across Christmas 2016 was an improvement on the previous year’s shocker, but that leaves Christmas 2017 with a higher hurdle to beat. Things have been getting less bad in the Clothing and Home division of late, but the Food business, which has kept sales afloat in recent years, has started to struggle. Indeed in response to declining fortunes in this side of the business, M&S recently decided to scale back its Simply Food store opening programme.

It’s still early days in the M&S turnaround plan, and management are working on a five year horizon to get the retailer in shape. However shareholders are going to need some encouragement along the way, and will be hoping to see M&S cash in on Christmas.

The retailer is ultimately hoping to boost online sales in the Clothing and Home division to one third of the total, so the performance of M&S.com will be an area of focus. Steve Rowe will hope this target is met by growth in the popularity of its online offering rather than shrinking in the high street retail business.

The average M&S store still needs to post close to 4% sales growth in Clothing and Home to draw level with Christmas 2014. Inflation should help M&S towards that target, however the rising cost of stocking the shelves in the first place means rising prices is something of a double-sedge sword. That applies across the sector, so while Christmas trading figures are of course significant, we won’t know exactly what the impact of profits will be until later in the year.


You’re about to read press releases, which we’ve written for media use only. They’re not intended for individual investors. They’re not personal advice and don’t include any recommendations.