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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.

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Big Box Man: options for Tesco and Dixons

The festive season hangover – the publication of Christmas trading results – is almost completed.  WH Smith will announce next week and, on past form, that is likely to be the end of it.  Thereafter, we will have to wait for actual half-year and full-year reporting, so that we can understand the levels of discounting that were needed to deliver some of those better-than-expected like-for-likes.

Away from the real strugglers, two businesses caught my attention.  The first was, of course, Tesco, whose -2.3% LFLs sat uncomfortably next to Sainsbury’s +2.1% and Morrisons +0.7%.  CEO Philip Clarke has now been in post for well over a hundred days, but he is acknowledging that Tesco has to change.  His comments, allied to the poor trading figures, caused a sharp fall in Tesco’s share price, but it’s very clear that action is under way.

I’ve written before about the grudging nature of the Tesco store experience (here), and the sense I always get that the best interests of the consumer have to be aligned with the best interests of Tesco, rather than the other way around.  It looks as though Clarke understands this – the Big Price Drop was yesterday’s response to today’s problem, and achieved the double of being trumped by other supermarkets’ vouchers whilst alienating loyal Clubcard holders; Fresh & Easy is looking like a bullet that needs to be bitten.

And here’s what interested me most: in conversation with Retail Week’s Alex Lawson, Clarke said:

You can go on growing space but we probably won’t be growing very big hypermarket space any more. We have got a few hypermarkets coming but will be announcing more on the bias of stores in April.

In other words, less of this in future?

And rather more of this?

We’ve seen problems for big box operators, as a result of online competition, in specialist sectors – Comet, Best Buy, Borders, Virgin Megastore and many more.  However, the suggestion that Non-Food isn’t pulling its weight at Tesco; that Non-Food is as vulnerable in Tesco to online competition and showrooming as it is in less diversified specialist retailers – well, that is quite a sea-change.  With 10% of all retail spending in the UK now taking place online, it’s inevitable that Tesco will be suffering attrition from online-only retailers, but the strategic shift implied by Philip Clarke (presaging an announcement in April) could herald the biggest shift in the pattern of UK retailing since Woolworth failed.  Perhaps it also paves the way for Tesco to save the high street…?!

However, I don’t buy the “big box dinosaur” argument, although – as the Tesco Extra picture above demonstrates – you can reach a point when the size of your store becomes oppressive, and just adds to the unwelcomeness that can be part of the Tesco experience.

But good big boxes will survive and thrive, both because retail parks work exceptionally well (particularly away from London) as the most cost-effective way of bringing a diverse retail offer to a scattered population, but also because the big box experience, when done well, can deliver results that the high street just can’t match.

And so to Dixons.  It’s been a filthy Christmas in electricals, with Best Buy closing down and Comet getting worse and worse as Kesa takes time to sell, leaving Dixons looking relatively healthy with a -7.0% like-for-likes.  Chief Executive John Browett has been concentrating on changing the way the stores look and – more importantly – the way the customer feels about his business.  I think he’s on the road to success – I liked the “Black” store at Westfield, and I really liked the refurbished Currys/PCWorld retail park store I visited earlier this week.

Like the store in this photograph, a consolidated electricals offer is now available under one roof, and sensibly the consumer electronics – audio, visual and computing – are on the ground level, with white goods – washing machines and vacuum cleaners – on a mezzanine.  This makes for a smaller and more efficient footprint, but it also enables Dixons to create an electronics offer that I think makes John Lewis look tired and off-pace.

John Lewis?  Bow, bow ye upper middle classes!  But where JLP presents a brown goods world of carefully delineated TVs, radios, hifi and computing, the new Dixons layout recognises that we don’t use devices in this way any more, and that the distinctions between various product lines are now blurred.  Its layout and flow presents a more effective offer for the consumer, and invites them to enhance their home electronics more effectively than old-style competitors.  Wireless sound systems and big screens are now computer adjuncts, not “hi-fi” and “television”, and Dixons gets it.

Their Knowhow sub-brand message is driven home with relentless effectiveness – we really do understand this stuff, it says.  Much has been made of the culture changes within the business, recognising (at last) that an ill-informed hard sell in an intimidating environment just doesn’t work any more.  The new stores are customer friendly with good graphics, plenty of explanation and demonstration items, and informed but unpushy service.

Dixons has a huge estate – over 600 stores of various ages and configurations – and it has much to do to bring them all into line with current best practice.  I’m optimistic, though – I think they’ve really got something here.  However – please – they’ve got to do something about branding.  The new stores aren’t “two stores under one roof” – they offer an integrated selection of electricals for the kitchen and every other room in the house (and office).  Currys was a dismal washing machine shop, with neglible brand heritage (and it’s a word that looks poor on fascias, sounds blah when you say it).  PC World harks back to the glories of Windows 95, but it leads with Apple and Kindle – suddenly, “PC World” sounds about as on-brand as Radio Rentals.  Time to can these hoary old brands, and return to the one with the best heritage in the sector:

Images: Wikipedia; The Guardian; Peterborough Today


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: