In today’s Peak 2017 update, we’re reporting on the latest figures from Top500 retailers from Burberry to Bonmarché, Halfords, Superdrug and Carpetright, and we also cover a trading update from the Royal Mail.
Burberry: progress on strategy, but Christmas sales fall as Brexit effect expires
Burberry this week said it was making good progress on introducing its new luxury-focused strategy in a third-quarter update. Retail sales, it said, fell by 2% to £719m, from £735m previously, in the three months to December 31, but that like-for-like sales rose by 2% on last time.
“We are building on strong foundations and are fully focussed on the successful delivery of our multi-year plan to position Burberry firmly in luxury and deliver long-term sustainable value,” said Marco Gobetti, chief executive.
Digital highlights included strong growth in its Asia Pacific region, where mobile accounted for about 40% of revenue. The retailer is also piloting a new and improved digital sales associate tool.
The retailer also said sales in the UK fell by a “high single digital percentage” during the period, which came a year after a period that saw tourists flock to the UK to benefit from the fall in the pound following the Brexit vote.
Bonmarché: strong online growth as store sales weaken
Online sales rose by 28.5% at Bonmarché in the 13 weeks to December 30, while sales at its 324 stores fell by 9.7%, like-for-like (LFL). Overall, sales were down by 5.5% in total, and 6.9% LFL. The ecommerce effect was even more pronounced in the five weeks to the same date, with online sales up by 39.2%, store sales down by 10.4% and overall sales down by 6.2%, or 7.5% LFL.
There’s more context in the figures for the 39 weeks to December 30, when total sales grew by 0.9%, were flat as a like-for-like figure, with sales down by 2.8% in store and up by 35.5% online.
The women’s fashion value retailer said that in anticipation of difficult market conditions it had controlled stock more tightly and reduced discounting compared to last year, improving overall margins despite falling sales.
Chief executive Helen Connolly said: “”The clothing market became more challenging during this quarter, especially on the high street; consequently our store LFL was disappointing. We are pleased with the strong growth we achieved in online sales, reflecting our strategic focus in this area. Following the trend seen throughout this year, the 50+ women’s outer/sportswear market declined compared to last year, however Bonmarché continued to grow its share.
“There remains uncertainty as to how trading conditions will evolve as we enter our final quarter. We do not anticipate material changes in the underlying market conditions, and in this short term outlook, the weather represents the most significant uncertainty due to its effect on consumer shopping behaviour, with the risks equally weighted on the up and downsides. At the end of the third quarter, the board’s view of the likely outcome for the full-year remains in line with previous expectations.”
She said upcoming self-help initiatives were expected to improve in-store sales while furthering online growth.
Halfords: online and services bring customers into store
Online sales (+13% year-on-year) grew strongly for Halfords over Christmas. Four in five (80%) online orders were picked up in stores, while service-related retail sales grew by 8.6% as drivers came into store to pick up, buy and have fitted items from bulbs and batteries to dashcams. Halfords reported rising sales from its retail (+3.2%) and auto centres (+1.9%) business in the 15 weeks to January 12: overall revenues grew by 3.2%.
Chief financial officer Jonny Mason said: “We are pleased with the overall performance of the group in the 15-week period given the difficult UK retail environment. We achieved record sales for Black Friday and Christmas thanks to great planning and execution and compelling product and service offers. Particular highlights included the growth in fitting services for car parts, cycle repair and increased sales of bikes, electric bikes and dash cams.”
Superdrug: online growth and focus on in-store service
Superdrug reported 30% growth in online sales in the four weeks to December 30, with like-for-like sales up by 2.4%.
The rise in online sales came as the retail improved delivery and introduced click-and-collect. Superdrug.com also launched in Sweden, Denmark and Finland. Digital healthcare services also grew strongly in the run up to Christmas with Superdrug Online Doctor delivering “record-breaking sales” and the December launch of the business’s new Online NHS Prescription service, which enables customers to manage their prescription orders online and have medication delivered to their home.
Superdrug’s Health & Beautycard, which claims the position of fourth-largest scheme of its kind in the UK, increased its members to 12 million.
Peter Macnab, chief executive of parent company A.S. Watson (Health & Beauty UK) , said: “We traded well during the festive period and I would like to thank all our colleagues for their hard work. Our continued focus on price, promotions and exclusive products gave customers more reason to visit our stores at the same time as offering them the beauty treatments such as gel nails and lash application from our Beauty Studio zones. Adding this extra level of service is something we’ll be building on over the next year and our new concept store opening in Fosse Park is just the start.”
Carpetright: warns on profits as footfall drops
Multichannel beds-to-carpets retailer Carpetright had little to say on online strategy as it warned on profits following severe falls in footfall since Christmas and a 2.3% fall in total group sales in the 11 weeks to January 13.
Sales were down by 3.6% in its UK market on a like-for-like basis as a result of “lower customer footfall, with transaction numbers down significantly year-on-year”. Since Christmas, like-for-like sales in its flooring market are down by 7.1% LFL.
Chief executive Wilf Walsh said: “Despite a positive start to our third quarter, we have seen a significant deterioration in UK trading during the important post-Christmas trading period. While average transaction values were up year on year, the number of customer transactions since Christmas was sharply down, which we believe is indicative of reduced consumer confidence.”
He added: “The severity of the decline in footfall over this key trading period and our more cautious view of the outlook for the balance of the year leads to a significant reduction in our full year expectations.
“Against this background of a further deterioration in market conditions, we remain committed to driving through the improvements that are essential to the long term repositioning of the business.”
PLUS Royal Mail: maintains lead in ecommerce deliveries
The Royal Mail said it continued to lead the UK market for ecommerce deliveries, and that it had a successful Christmas.
In a trading update for the nine months to December 24, the company reported a 2% rise in revenues across the group, although income from its UK division was flat.
Chief executive Moya Green said: “We have had a good performance over the important Christmas period thanks to the hard work and dedication of our people. They pulled out all the stops to deliver a great Christmas for the UK.
“We remain the number one facilitator of ecommerce in the UK due to our significant investments to improve our customer offering. Parcel volumes in the nine months were up 6%, with 149m parcels handled over the December trading period. Letters performance was better than expected with addressed letter volumes down 5%.”