Christmas trading 2011: results table – Wednesday (and final?) update

25th January 2012

WH Smith traditionally brings the Christmas results season to a close, and here they are, down 6% in the high streets and 3% at their Travel division.  Although this was accompanied by the usual statements about the entertainment categories (CD, DVD, now an infinitesimal part of Smith’s mix), and “resilience”, “challenge” and “cost controls” all made their usual appearances, there was little indicating retail progress.  Strong categories?  Kobo and online?  Former British Bookshops stores?  You can manage a business for cash for so long (and it’s been so long that it’s remarkable), but at some point you have to sell more product, to more customers, more often.  That’s what we want to hear from WHS, and it’s what’s missing again.

19th January 2012

I’ve been on the road for the past couple of days, and quite a few gaps in the table have been filled during that time.  Strong sales from Primark and Matalan indicate that there’s still a desire for value when it’s done well.  Of course, you might say the same about Peacocks, which by all accounts remained operationally profitable, but has been crippled by debt and forced into administration, threatening the biggest one-off loss of retail jobs since Woolworths in 2008.

The Centre for Retail Research in Nottingham has published a sobering schedule, detailing retail failures from 2010-2012.   They state that, over the five years 2007-2011, 173 retail businesses folded, comprising a breathtaking 18,342 stores, and over 150,000 jobs.  Questions please to the CRR –here’s the link.

Back to Christmas 2011, and at the other end of the fashion scale, Burberry and Mulberry have announced excellent growth, but it’s been unclear whether the numbers have referred specifically to UK retail, so I’ve omitted them.

No such qualms with not-retailers-at-all Greene King and JD Wetherspoon.  Looks as though we still have money to spend on a night at the pub!  And animals had a good Christmas, even if their owners cut back, with Pets at Home up 4.9%.

I posted a like-for-like book sales for Oxfam last week, and this has been followed by a flurry of other figures, reported in the Guardian.

Biggest news from the mid-week period has been from the electricals retailers, with Dixons (Currys/PCWorld) hailing -7.0% as a relative success, and Comet’s  -14.5% a reflection of the grim condition of a business struggling through a sale process, and pretty much disowned by Kesa.

However, I think there are good things to be said about Dixons, but they need a separate blog – watch this space…

16th January 2012

Just three additions today – Boots and The Perfume Shop, both looking good; and the McArthurGlen outlet centres, which appear to have had an exceptional season.  It’s worth bearing in mind that Christmas historically has peaked early at outlet “villages” like Swindon and Cheshire Oaks – outlet customers search out the best bargains early, and then complete their shopping in traditional malls and high streets – from memory, the final weekend in November was typically the best in the run-up to Christmas.

Who are we still waiting for?  Of those who made Christmas trading announcements last year: Electricals – Currys/PCWorld and Comet; books/media – WH Smith and Waterstones (though the latter is now privately owned, so is under no shareholder pressure to announce); fashion: Primark, Matalan; DIY: B&Q (though Christmas is hardly a prime season for them, it’d be good to benchmark their performance against Homebase and GCG).

Who would we like to hear from?  Big, successful private businesses like Arcadia and River Island; PE-owned growers like Pets at Home and Hobbycraft; discount grocers like Aldi and Lidl, and bargain retailers like Poundland; niche successes like Jack Wills and Cath Kidston; mega-brands like Selfridges…  It’s a long list, and any analysis of published numbers is inevitably just a snapshot of a sector which is far less plc-dominated than in the past.

13th January 2012

A quick final update before the weekend is upon us.  Has Tesco had enough press coverage?  As Twitter noted last night during News at Ten, you’d think they’d called in the administrators…  Still, Philip Clarke has been very candid about the challenges Tesco faces, and has been reminded (as The Times editorial today emphasises) that no company stays at the top forever.  I’m thinking hard about Tesco Extras, and a separate blog might follow…

Nils Pratley on The Trouble at Tesco

Harry Wallop on Is This the End of Tesco Dominance? (QTWTAIN)

Meanwhile…  Good numbers from Original Factory Shop, The Entertainer and Superdrug, but another tough season for Theo Fennell.  Nul points to Asda and Ted Baker for announcing total growth for Christmas, but not like-for-likes.  Of course, I appreciate they don’t have to announce anything at all, but if I had shares in Wal-Mart, I’d want to know what was what.

12th January 2012

After a positive start to the week, things have turned ugly with poor results from Tesco spooking the markets, and throwing fresh doubt over the sector.

As you can see from the table above, Tesco has performed significantly worse than other supermarkets (and M&S food, which has been broken out separately in reporting, and which saw a like-for-like increase of 3%).

House of Fraser has posted some remarkably good numbers, but it isn’t clear whether they’re inc or ex-VAT.  For the record, I’m a committed ex-VAT person – including a variable rate of tax in your sales is no way to accurately reflect like-for-like shopper behaviour.

(At Borders, 75%-80% of our sales were VAT-free – books, newspapers and magazines – and the remainder was VATted – stationery, CDs, DVDs, toys etc.  We also paid a “special rate” of VAT, where eg a CD-ROM was attached to a book on computing or language learning, which reflected the fact that part of the whole product was zero-rated.  I’d like to think that the HMRC officers required to create and police these rules, and audit the proceeds, cost rather more than the total tax take.)

Anyway, back to Christmas 2011, and as expected, times were tough at the likes of Halfords, Thorntons and Mothercare.  Argos had a particularly grim set of results – for how long will 750 stores be sustainable?

Some more variances to reporting periods, highlighted in green.  These were the reporting periods twelve months ago:

  • Tesco LY: 6 weeks to 8th January
  • JD Sports: 5 weeks to 1st January
  • New Look: 15 weeks to 8th January
  • House of Fraser: 5 weeks to 8th January

FTSE 100 retailers are now shown in bold.

10th January 2012

Plenty of results added to today’s table, including a couple of outriders that you may not have seen reported elsewhere!

Game takes over at the unhappy end of the chart; their LY numbers are highlighted because of a change in reporting period – for 2010, they reported five weeks to 8th January, this time around, an additional three weeks pre-Christmas were included.  The Co-op also made a change – the prior year numbers relate to a 13 week period, October – December.

There’s some inc-VAT (Debenhams) and ex-VAT (Majestic) differentiation, which given the rate jump from 17.5% to 20% has a bearing on different companies’ numbers.  And of course, these are just sales – not profits.  The rumbling undercurrent – “of course, their margins will have taken a hit” – accompanies many of these announcements.

Nevertheless, it’s great to see many more pluses than minuses on the schedule – long may it continue…

9th January 2012

And they’re off.

It looks as though this year, every media source and his dog is going to be publishing regular updates on Christmas trading, so I’ll keep this brief, and update it as required.

I’ve included last year’s numbers, where I have them – and as this is a busy office, I haven’t dug out LYs where I previously didn’t have them – I’ll try and infill if Edwin Drood becomes unwatchable.

Worth noting that, where comparisons exist, the order of companies is exactly the same as last year.  (The reporting periods are all similar, so these are good comparisons.)

It’s worth remembering that bad results always take longer to calculate than good ones…

And for the many hundreds of you who enjoyed my “8o towns” blog from last week, I’ve shown store numbers.  Counting stores is always an inexact art, but most of the chains are on multiples of eighty.  Some will stay that way – supermarkets, Next.  But there’s restructuring in the air.

Just to keep us all honest, this article from the Telegraph highlights some of the more imaginative ways that Christmas performance can be characterised.

And, lest we forget, the following chains probably won’t be providing Christmas trading updates:

Barratts Priceless, Blacks, D2 Jeans, Hawkins Bazaar/Tobar, La Senza, and Past Times.  Ask not for whom the bell tolls, but let’s hope stores can be rescued, and jobs maintained.

Christmas: far too early to call

Not a great deal of action on the Front of Store blog in the past couple of weeks, as I’ve been out on the road a lot, assessing stores, formats and catchments.  Plenty of news in the retail sector, though, with the end of the Best Buy brand in the UK, and the sale of Comet for £2 (with a £50m dowry); as the Observer comments on the electricals sector this morning:

Amazon’s small overheads and Tesco’s huge scale have enabled cheaper products to eat away at the specialists’ profits. So far they have resisted the fate of the book and record stores swept off the high street by online rivals. Could the worsening economy now push yet another retail category into the virtual universe?

It has been a difficult autumn across most retail categories, with the continued mild weather slowing down sales of winter fashion and precipitating a series of one-day events at the likes of House of Fraser and Debenhams.  Recent results at Next and Marks & Spencer both illustrated how challenging the middle market is, even for the best-run businesses, and WH Smith unveiled lower sales and higher profits for the nth successive quarter – Nils Pratley has commented astutely on this.  (Nationally, book sales are poor, running 12% down on 2010 last week.)

There are just 41 shopping days left until Christmas, and though the streets of Staines were busy yesterday afternoon, there’s still a lot more window shopping than actual commerce taking place.  Consumers are well-versed on tough Christmases now, and the question is not “will prices fall?” so much as “how early will the sales start?”.  There’s already plenty of red-and-white in the windows, as hard-pressed retailers seek to liquidate stock and free up cash.

London’s West End tourist boom continues, with Crown Estates announcing that there will be fewer, larger stores in Regent Street in the future; Westfield Stratford has welcomed millions of customers (I’ll be back there on Tuesday) and has indicated that the old Whitgift Centre in Croydon could be next for the Westfield treatment.  But London has never been as disassociated from the rest of the country, in retail terms, as it is now.

It’s going to be a difficult Christmas, with every sale a small victory against consumers’ tight purses and low levels of “feel-good” (despite that “Capracorn” John Lewis ad).  Online will grow, device sales will soar (Best Buy may be dead, but Wireless World is Carphone’s focus now) and new retail formats will emerge on the shoulders of the old.

On a lighter note, here are a couple of stores positioning themselves for the future of the book trade:

Westfield Ho! Visiting Stratford City, Part One

Westfield’s latest gigamall has been open for a full week, and with the initial surge of retail CEOs and business journalists subsiding, we visited yesterday.

As you will have read, it’s vast, with three full storeys of stores on a banana-shaped axis, with a series of spurs and an open-air mall creating some sort of circuit.  However, the layout is far from the “box” pattern of Westfield’s White City mall, and we reckoned customers are more likely to traverse the banana, change levels and come back again, than explore the byways, as currently configured.

With 300 shops and 70 restaurants, a single visit – even a five hour slog – only allows you to scratch the surface of what’s on offer.  Much of the coverage so far has concentrated on the big fashion flagships on the First Floor.  The fit-out and confidence of Next and Forever 21 are most impressive; however, my colleague and I focused on the sectors that most interested us.

Westfield is clearly zoned, with smaller stores on the Lower Ground level providing a variety of services; accessories and mixed fashion on Ground; and high fashion on top, as noted above.  So let’s take a look at the Lower Ground.

If you come by train or tube, this is where you arrive, and a peachier location for a Starbucks is hard to imagine.  The store is light, bright and comfortable, using natural materials in place of the traditional lashings of terracotta paint.  Some of the comfort might have to be sacrificed in favour of more seating, but the three tills and six service staff were busy and cheerful.  A good meeting point, and a strong start to any visit.  With outward-facing seating, this is an excellent people-watching venue.

And the people we watched appeared to be overwhelmingly local on Monday morning.  You don’t have to be wealthy to shop at Westfield – this theatre of dreams showcases mostly high street brands, including a vast Primark, and the bargaintastic Deichman Shoes.  High-end brands are here in force, of course, but there is no space equivalent to The Village at White City.  It’ll be interesting to see how the clientele balances out as the scheme matures, but, as others have commented, it’ll be hard to assess the real success of the scheme until the spring of 2013, when the Olympics are a memory and a second Christmas has delivered like-for-like data.

Right, back to the stores.  Immediately opposite Starbucks, tucked in next to Eat, is WH Smith, which had to win the Worst Merchandised Store accolade.  Appearing almost deliberately contrarian, WHS has opted for a cheap, “hospital convenience store” shopfit.  The magazine section was incomplete, the book offer was thin, and the rear of this small, wedge-shaped store appeared to have been ransacked by shoplifters, with minimal recovery, confusing merchandising and gaping empty spaces.  Staff were confined to the tills, and some of the ranging (the emphasis on CD-Rs, CD carrying cases etc) appeared to be distinctly last decade.  Compared to Smith’s confident store at White City, this was a disappointment.  It’s also only about half the size of the existing WHS store in the old Stratford Shopping Centre, which suggests that smaller Smith stores are here to stay.

After that, things improved, as we entered the Land of the Tech/Phone Shops.  The biggest statement was the most confusing – the Currys/PC World “Black” store.  This is an important strand of Dixons’ business realignment (in essence, doing what everybody in this sector has to do, and compete, somehow/anyhow, with Apple), but the message is a  muddled one.  Is this a Currys store, where I go for washing machines?  Or is it a PC World store, where I browse the wonders of Packard Bell?  It’s dual staffed with both brands’ uniforms in evidence; a helpful sales assistent tried to unravel the Black concept for me, stressing that PC World had a great reputation for laptops (I’ll grant, they’re a go-to location), and that Currys was equally well-known for cameras (this had passed me by).  Staff at the Black store would offer advice on selection and set-up, but wouldn’t be delivering that legendary Dixons hard sell.

Gazing around at the thousands of SKUs, I was reminded of a comment by Graham Bishop in Retail Week.  This recognised that:

Customers have more information on hand than sales staff [having arrived at the store after fully researching their choices online], and often have killer questions that they open with to test staff to see if they are worth talking to.  [The future will consist of]… less stores, and a different role for the people manning them.

This seems spot-on to me.  It simply isn’t possible for sales staff to understand the menus and functions of hundreds of different PCs, laptops, tablets, phones, sat-navs, cameras, MP3 players, hi-fis, TVs and all the rest.  The only people who can pull this off are Apple, who essentially only offer five products:  the iPod, the iPhone, the iPad, the MacBook, and the iMac.  These come in various sizes and capacities, but mastering five products that essentially reflect identical Jobsian logic, is doable, whereas being able to comment authoritatively on the whole market is just impossible.

Instead of using the technology simply to sell itself, it needs to be harnessed to provide a proper features-and-benefits, compare-and-contrast service.  This could clarify the conflicts that the consumer has to resolve between functions, price/value, and style; it may mean that some manufacturers have to fight harder for sales floor space, but it would enable the savvy shopper to review what the store is selling intuitively, rather than being blinded by hundreds of matchbox-sized cameras or goofy docking stations.

Confusingly, three brands – Currys, PC World and Black – aren’t enough.  Although Dixons (the most obvious moniker) remains on the subs bench, the store is also majoring on Knowhow, which has its own, separate look and feel.  This is a bit of a Geek Squad me-too, but the “rainbow button” logo is strong, and a convincing store could be built around this principle, which would be far more appropriate than the very middle-aged Currys and PC World brands.

On, to Everything Everywhere.  This not-very-full store was in the heart of phoneland, with Phones4U, O2, Virgin Media all in spitting distance, and it brings together the funky Orange and prosaic T-Mobile brands into a not-very-exciting whole.  This was a pity, as Orange has created some exciting stores in the past, and is the most consistently imaginative of the major brand network providers.  The Westfield store felt very generic, despite its spaciousness and good service; you can’t help but feel that ditching one of the consumer brands would be wiser than trying pretend that two brands can deliver the same service more effectively than one.  Otherwise, aren’t we going to get lost in Austin Cambridge/Morris Oxford territory?

The Vodafone store has yet to open, but Carphone was trading, out of a relatively small and conservative space.  We got a distinct sense that Carphone might be mislaying its mojo, with a cautious and tight selection of phones and tablets.

Now, it should be emphasised that the service we experienced in all of these stores was excellent, and stayed helpful and engaged after it had become clear that we were retail watchers with no purchase intentions.  Nevertheless, life in the basement of Westfield is tough, where phone shop fights phone shop for superiority.  Only one brand rises above the fray…

London is full of Apple stores, and the Westfield store had no new products on offer.  However, around one hundred Blueshirts were in constant motion, exciting their customers with their zeal and commitment to the world’s most successful consumer brand.  It’s not for Apple to slum it in the bowels of the mall, jousting with the other tech providers.  Apple is for everyone, and sits alongside Hollister and Zara in primo prime pitch on the First Floor.  As I’ve already observed, the product range is deliberately limited, so the cathedral of tech can provide dozens of functioning examples of each piece of kit, instead of the one or two that other stores can offer.  Despite the crowds, despite the absence of an exciting shopfit or indeed any memorable distinguishing features, this is the shop that delivers what the customers want.  What’s retail success about?  Product + service?  Check.

And that’s long enough for one blog, but there’ll be more to follow, including a stellar M&S and a surprisingly disappointing JohnLewis.  Watch this space……