Setting the scene
Online spending grew by 11.5% in December, according to the latest MasterCard SpendingPulse, out today. It suggested that retail spending during the Christmas holiday month was up by 2.2% on last year, with sales increasing fast just before December 25.
But said Mastercard, drawing on analysis of cash and card payments, the Boxing Day sales saw weaker footfall, suggesting that shoppers were “satiated” by Black Friday discounting.
Online, it said, fared better than offline across categories. In food, for example, while overall grocery spending was 0.5% up in December, online grocery sales were up by 10.7%. Overall spending on clothing fell by 1.3%, but online sales were up by 13.7%.
Scott Abrahams, senior vice president of business development at Mastercard UK & Ireland, said: “When looking at the year as a whole, 2017 saw retail sales increase by 4%. Although Christmas trading was tough and showed a mixed performance among retailers, these results do show that there are some areas of optimism for British retailers, particularly those with a strong online presence.”
Ecommerce led for Next [IRDX RNXT] this Christmas. The fashion retailer, a Leading retailer in IRUK Top500 research, this week reported a 13.6% rise in online full-price sales in the 54-day run-up to Christmas Eve, contrasting with a rise of 10.4% in the year to the same date.
Store-based retail sales were down over the same periods, by 6.1% in the 54 pre-Christmas days, and by 7.2% over the year. Overall, full-price sales rose by 1.5% in the run up to Christmas, and by 0.2% over the year. Next suggested the sales boost was helped by colder weather ahead of Christmas, when many areas of the country saw snowfall. But it also said that next year challenges were likely to include falling consumer demand as shoppers both see their incomes decline and favour spending on experiences ahead of clothes.
In contrast, Virgin Experiences said that spending on its Virgin Experience Days had grown by 24% over the last four years, including record Christmas trading sales.
Next now expects to see full-price sales for its financial year to January 2018 rise by 0.3%, and pre-tax profits to come in at £725m, down by 8.3% on last time.
In the year to 2019 it aims to grow full price sales by up to 4% – and says that if it achieves growth of 1%, pre-tax profits will come in at £705m for the year, 2.8% down on 2018.
The retailer also said that it cut back on discounting, despite taking part in the Black Friday event. Stock for its end-of-season sale, and including Black Friday stock, was down by 6% on last year. It says clearance rates are now in line with expectations.
A combination of digital sales and “tactical” discounting provided stronger sales for Debenhams [IRDX RDEB] ahead of Christmas, although sales fell in the longer-term. In its six week Christmas period, like-for-like sales grew by 1.2% and online sales by 15.1%. But in the 17 weeks to December 30, like-for-like sales fell by 1.3% – and by 2.6% in the UK – while digital sales rose by 9.9%.
The department store group, a Leading retailer in IRUK Top500 research, said it took “tactical promotional action to improve our performance which resulted in a stronger six week Christmas period against tough comparatives”. But, it said, the first week of the post-Christmas sales was below expectations despite further price cutting.
IRUK Top500 Elite retailer John Lewis [IRDX RJLW] reported strong sales of £191.3m in the week to December 23, up by 8.9% on the same time last year. But the following week was quieter, with sales of £137.9m in the week to December 30 down by 0.4% on last time. Dino Rocos, operations director at John Lewis, said the dip had come “in a week that saw parts of the country impacted once again by snow”. But, he said, Clearance had a “confident start”. During the week fashion sales rose by 8.4% while home sales were down by 4.5% and electrical and home technology by 5.4%.
Waitrose [IRDX RWAI] sales came in at £247.2m in the week to December 23, up by 0.5% on the same time last year, and grew more quickly in the week to December 30, when they came in at £113.9m, up by 3.5% on last time. Waitrose IT director Mike Sackman said sales for the week of December 23 were affected by Christmas Eve falling in the following week. He said it had been “another busy and competitive festive period” supported by “the exceptional hard work of partners in our shops, supply chain and across the business”. Waitrose is a Leading IRUK Top500 company.
Mountain Warehouse [IRDX RMWA], a Top250 retailer in IRUK Top500 research, said reported a 38.2% lift in sales in the six weeks to December 31, with online sales up by 76.6% and like-for-like sales up by 33.1%. The outdoor clothing and equipment retailer said Black Friday was the busiest day in its 20-year history.
Chief executive Mark Neale said it had been a “cracking Christmas”, with remarkable sales growth at home and abroad (international sales +43%). “A business which equips customers to brave the elements will always benefit when it snows and the December cold snap was a bit of an early Christmas present for us,” he said. “Another was Black Friday, with sales reaching £2m in a single day for the first time in our history.”
He added: “The shape of Christmas has changed in recent years. It used to get gradually busier week by week from November onwards. More recently, since the Black Friday phenomenon came to the UK, there has been a spike in sales followed by a couple of quieter weeks and a late rush. This year, the bad weather meant we didn’t really see much of a slowdown after the Black Friday stampede.”