In our This Week in Peak coverage, now in its final week, we look at the Christmas figures from Boohoo, JD Sports and Shop Direct. All have done well as they benefit from shoppers’ changing behaviour to buy more of their shopping online. Boohoo and Shop Direct in particular has also benefited from the quest for lower prices, while JD Sports focused on maintaining its pricing without resorting to discounting.
Athleisure retail brand JD Sports Fashion says its sales were 15% up across its sports fashion brands in the 48 weeks to January 5. Like-for-like sales, it said, were growing by more than 5%, including a positive performance over Black Friday and the Christmas period.
It also says that its policy of steering clear of “short-term reactive discounting” meant it had maintained profit margins. All of this, it says, is down to its commitment to multichannel retailing.
“Given the well-publicised challenges within the wider UK retail market, we are pleased with this trading result which further demonstrates the robust foundations of our dynamic multibrand multichannel proposition across our core market and our capacity for further growth across an expanding geographical reach.”
The retailer, ranked Top50 in IRUK Top500 research, now has two stores in Thailand and five JD stores in the US, including three that were previously Finish Line stores. It has gained confidence from the early performance of JD in the US and now plans to convert up to 15 more Finish Line stores in the first half of 2019.
It is now predicting that pre-tax profits will be at the upper end of expectations, despite “some labour cost inefficiencies” during the corse of its transition to an enlarged and further automated warehouse at its Kingsway site.
Peter Cowgill, executive chairman at JD Sports, said: "I am pleased with the continued progress of the Group both in terms of our performance in existing markets and the recent positive developments in the United States. We are confident that domestically and internationally, in stores and online, our unique and often exclusive sports fashion premium brand offer provides a solid foundation for future development.”
The fastest growth came at Very (+8.8%), as site visits across Shop Direct brands rose by 8% to 107.3m, and mobile sales grew by 12.7%, year-on-year (YOY). Some 79% of online sales came from mobile devices, up from 74% last time. Shop Direct said that its sales growth - which came across product categories – was achieved while maintaining profit margins, despite an extended Black Friday period of discounting. Very and Littlewoods were among the first to launch Black Friday campaigns - on November 9 - and they ran until November 27.
Shop Direct points to Very’s digital out-of-home advertising campaign, which featured dynamic sales messaging in high street locations, provided shoppers with real-time information about online pricing, stock availability and demand for offers.
At the same time, it says that the customer experience improved thanks to the integration of IBM Watson’s machine-learning technology with its Very Assistant, the in-app chatbot. It allows customers to ask questions about their account in their own words to receive answers from the assistant. It also developed a Facebook Messenger chatbot to help customers choose gifts for children on Very. Customer service improvements such as these, coupled with online self-service, helped Shop Direct reduce customer calls to the contact centres by 30%.
The retail group says that of the 6.8m parcels it delivered in the seven weeks, 25% were delivered via CollectPlus, using click and collect services. Those opting for home delivery were also able to track the van and count down to the moment of delivery.
“I am delighted that against a challenging retail backdrop we delivered a record Christmas period in terms of total revenue whilst maintaining retail margin rate in line with last year,” said group chief executive Henry Birch. “I’m very proud of what the team’s achieved. Throughout our peak trading period we focused on delivering a great customer experience and curating the right deals for our customers and our business during our extended Black Friday event. We put more emphasis on December than ever before and saw encouraging growth in key departments like sportswear and toys.
“Looking ahead to 2019, we’ll focus on continuing to play an important role in the lives of our customers – those who value our unique combination of leading brands and the flexibility to spread the cost of purchases. Given the potential impact of the political backdrop on consumer spending, we expect the year will be challenging for retailers. However, our peak trading performance gives us reason for cautious optimism.”
Littlewoods is a Top50 retailer in IRUK Top500 research, while Very is a Top100 trader.
Boohoo saw its sales rise quickly in the Christmas quarter of its financial year. Sales grew to £328.2m in the four months to December 31, up by 44% on the same time last year. Already impressive growth of 33% in the UK was thrown into the shade by a 78% boost to revenue in the US, and 57% in the rest of Europe. Unlike some competitors, Boohoo also successfully maintained its profit margin, up by 170 base percentage points to 54.2%.
The figures continued the longer-term trend: in the 10 months to December 31, total revenues reached £723.5m, 47% up on the same time last year. Over the longer period, sales rose by more than a third in the UK (+38%) and still more sharply in the rest of Europe (+56%) and the US (+75%).
During the Christmas quarter, sales at Boohoo grew by 15% to £163.5m, while those at PrettyLittleThing almost caught up (+0.5% to £144.2m),and sales at Nasty Gal grew by 74% to £20.6m. Boohoo now expects to see full-sales grow ahead of expectations and profits to remain on target, with growth of between 9.25% and 9.75%. Boohoo and PrettyLittleThing are both Top250 retailers in IRUK Top500 research.
Joint chief executives Mahmud Kamani and Carol Kane said: “We remain firmly focused on continuing to provide our customers with great fashion at unbeatable value. The global growth opportunity is significant and we will be addressing it in a controlled way - investing in our proposition, operations and infrastructure to capitalise on the opportunity.”
Image courtesy of Boohoo Group