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IREU Merchandising Report 2019

IREU Merchandising Report 2019

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M&S, Debenhams, Sainsbury's, Tesco and John Lewis: who are the winners and losers on the High Street?

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M&S: restructure on course, but Christmas was still a challenge
M&S: restructure on course, but Christmas was still a challenge
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M&S and Debenhams log poor results, but Tesco and JLP come out as high street winners

A raft of UK Top500 retailers have reported results, with M&S, Sainsbury’s and Debenhams all showing declining sales across a depressing December, while Tesco and John Lewis come out as relative winners.

 

M&S, which is in the midst of a restructuring process of store closures and investment in mobile, said it was seeing “encouraging signs”, but added that like-for-like clothing and home sales dropped 2.4% over the 13 weeks to 29 December, while comparable food sales fell 2.1%.

 

M&S chief executive Steve Rowe said: "Against the backdrop of well-publicised difficult market conditions, our performance remained steady across the period. Our food business traded successfully over Christmas as customers responded to improved value. Our transformation programme remains on track."

 

Sainsbury’s saw like-for-like sales down 1.1% in Q3 2018, dragged down by a 2.3% drop in merchandise sales– which includes sales from Argos – and a 0.2% fall in clothing sales. Food was up 0.4%. The failure of Argos outlets in stores to lift Christmas sales for the retailer is a particular disappointment.

 

The retailer, which bought Argos some two years ago, said shoppers held back on buying toys and electricals, instead buying cheaper food products amid what the retailer calls "a ’cautious’ consumer backdrop". The whole group also said sales were hampered by a decision to swerve heavy discounting, even over Black Friday.

 

Debenhams also logged poor results for the Christmas period, with gross transactions falling 3.8% in the six weeks to January 5. Comparable sales in the UK were 3.6% lower than last year due to weak store footfall.

 

However, they were, in the words of chief executive Sergio Bucher, the "best possible outcome" in an uncertain time. He told Sky News: "We responded to a significant increase in promotional activity in the market, particularly in key seasonal categories, in order to remain competitive for our customer. "We have taken decisive steps to maintain rigorous cost and capital discipline, and I am grateful to my colleagues for their hard work as we maintain a rapid pace of change."

 

But the news wasn’t all doom and gloom. Tesco and John Lewis surprised markets by logging relatively good results over the Christmas period. Tesco posted a 2.2% rise in UK like-for-like sales over the festive period - beating expectations, while the John Lewis Partnership, Britain’s biggest department store operator, said sales rose 1.4% to £2.2bn in the seven weeks to 5 January.

 

JLP did, however, warn that profits across the while year would take a hit as it too, like all other retailers has been dramatically affected by massive discounting and Black Friday this year. According to the BBC, it may also be the first year that the retailer doesn’t pay its staff a bonus.

 

In fact, while some did well, overall retail growth was flat across the Christmas period in stores, according to the British Retail Consortium (BRC). Online, meanwhile, grew by 5.8% in December, against a growth of 7.6% in December 2017. This is above the three-month average of 5.5% but below the 12-month average of 6.9%. Online penetration rate increased from 29.1% in December 2017 to 31.2% last month.

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