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IREU Merchandising Report 2019

IREU Merchandising Report 2019

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THIS WEEK IN PEAK What figures from Mothercare, Halfords, Majestic Wine and more say about how shoppers bought this Christmas

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Mothercare says its online sales were down by more than 16% over Christmas
Mothercare says its online sales were down by more than 16% over Christmas
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THIS WEEK IN PEAK What figures from Mothercare, Halfords, Majestic Wine and more say about how shoppers bought this Christmas

This week has been a busy one as retailers continued to issue Christmas trading updates. The British Retail Consortium says that sales growth this Christmas had, overall, stayed flat on the high street as business moved online. Yet while some retailers saw sales fall over Christmas, compared to last year, others prospered. My colleague Paul Skeldon earlier covered updates from Debenhams, M&S, John Lewis, Tesco and Sainsbury’s, and earlier in the week we reported on Morrisons, Footasylum, Dunelm and Joules.

 

Here we round up figures from retailers from Halfords and Mothercare to Majestic Wine, Topps Tiles and more.

 

Halfords: sales grow online but are down overall

Halfords said its like-for-like sales fell by 1.7% in the 14 weeks to January 4 as the combination of mild weather and weak consumer confidence hit, with retail sales down by 2.2% LFL, or 2%in total. Motoring retail sales were down by 3.4% and car maintenance by 4.6%, while cycling sales were also down (-0.3%). A fifth (20%) of sales take place online and these sales grew by 7.5% over the period. Four in five (80%) of halfords.com sales were collected in-store over the period.

 

The retailer, a Leading trader in IRUKTop500 research, now expects consumer confidence to remain weak into next year and said that its full-year profits could also stay flat on the previous year - less than previously expected.

 

“This has been a challenging third-quarter for the business, driven by exceptionally mild weather and online weak consumer confidence,” said Graham Stapleton, chief executive. “Together, these factors have led us to reduce our profit expectations. Whilst this has been a difficult period, we have managed costs and margin well and our free cash flow remains strong.”

 

Mothercare: sales down across channels

Mothercare reported an 11.4% drop in like-for-like UK sales during the 13 weeks to January 5, and said that its online sales were down still more sharply, by 16.3%. That came as fewer people visited its stores and its website, and as it weaned itself off the discounts that dominated the previous year’s trading. In-store iPad sales were down as a result of its store closure programme. International sales, meanwhile, fell by 3.2%.

 

Mothercare, a Top50 retailer in IRUK Top500 research, says it’s still in full transformation mode, and on track to have 79 stores by the end of March 2019, down from 137 in May 2018. It also aims to be debt free by the end of the year.

 

“Whilst the UK continues to be challenging, in part as a result of our planned restructuring, we are still on course to deliver the necessary transformation,” said Mothercare chief executive Mark Newton-Jones. He added: “The UK business will now operate with the discipline of a franchise, allowing the wider group to focus on the Mothercare brand and making it stronger globally.”

 

Majestic Wine: focused on winning in a competitive market

Majestic Wine reported an overall rise in group sales of 6.3% over the Christmas period, largely thanks to faster growth at pureplay wine specialist Naked Wines (+15.9%). Store-heavy Majestic’s own retail sales were up by 1.5% in the 10 weeks to December 31, by contrast - and that thanks to its online and Concierge services. While the retailer, a Top150 trader in IRUK Top500 research, grew market share, profit margins were 1.2 percentage points lower than last year in what Majestic said was “a very price promotional market”.

 

Chief executive Rowan Gormley said: “As we said in November, consumer behaviour is changing and we’re seeing a revolution in retail. We think there will be winners and losers, and we believe we have what it takes to be one of the winners. We are uniquely placed, with the people, data and skills in place to succeed despite the headwinds we are seeing.”

 

Ted Baker: online helps lift sales

 

Retail sales rose by 12.2% at Ted Baker in the five weeks to January 5, thanks to an 18.7% boost to online sales. Ecommerce represented 25.7% of total retail sales over the period, up from 24.3% at the same time last year. This retailer, a Top250 retailer in IRUK Top500 research, also cited a climate of discounts, but said that its profit margins were in line with expectations over the full-year, and that its full-year figures should meet its targets.

 

Acting chief executive Lindsay Page said: “The Ted Baker brand has delivered a good performance across both our stores and ecommerce business, despite the continuing challenging external trading conditions across our markets. This result again reflects the strength of the brand and the quality of our collections.”

 

The retailer has completed the acquisition of US footwear company No Ordinary Shoes, for £20.3m.

 

DFS: sales grow as the retailer focuses on gaining market share

DFS saw its like-for-like sales grow by 10% across channels and by 22% online in the five months to December 30.

 

The rise, said the retailer, a Top350 retailer in IRUK Top500 research, came as shoppers who put off buying in the fourth quarter of the previous financial year by hot weather, made their purchases. The DFS Furniture group now operates Dwell, Sofa Workshop and Sofology as well as its core DFS brand. It said that it did expect to reap further benefits from the integration of Sofology that would help to counteract the effect of the challenging retail environment. “It is worth reiterating that the group has historically capitalised any adverse trading conditions to build our market position and we continue to believe that our cash generation and long-term growth prospects will drive attractive returns for our shareholders,” it said.

 

Topps Tiles: digital and stores remain key although sales slightly down

 

Topps Tiles described the opening to its financial year as “robust” – as it reported a 1.4% fall in like-for-like sales in the first 13 weeks of its year, to December 29. The tile specialist, a Top100 retailer in IRUK Top500 research, which trades from 367 stores and online, says digital remains at the heart of a multichannel business, and that almost all of its customers use both its stores and its digital channels when they buy from it.

 

Chief executive Matthew Williams said: “Against a challenging market backdrop and a strong period of performance in the prior year we believe the business has performed robustly over the first quarter. We remain excited by both the opportunity for profitable growth that our expansion into commercial segment will bring and the continued opportunity to further strengthen our market leading position overall.”

 

Card Factory: strong Christmas trading period

Card Factory, a Top350 retailer in IRUK Top500 research, said sales were "robust" across the Christmas trading period. Revenue grew by 3.4% in the 11 months to December 31, while like-for-like sales dipped by -0.1%. Growth was stronger online, with cardfactory.co.uk sales up by 59.1%.

 

Image courtesy of Mothercare

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