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How’s the retail shake-out working for you?

Some smiling faces in the retail community this morning, with news that like-for-like sales in September lifted by 1.5%, easily the best result of the year.  Why the bounce?  There will have been some pent-up demand, following the armchair weeks of the Olympics and Paralympics, and – extraordinarily – there was actual alignment between fashions instore and the weather outside, so customers stocked up on winter clothing.

This didn’t necessarily mean a kiss of life for the high street, however – online sales rose by 9.9% year-on-year, compared to 4.8% in August, so the big shift from physical stores to the online environment accelerated, once customers started shopping again.  And JJB Sports called in the administrators at the end of the month – one of the biggest failures in a terrible year for business failures.

There’s an interesting piece in the FT this morning (you’ll need a subscription), which lists some of 2012’s most notable casualties – Blacks, Game, Clintons etc – and notes the overall fall in the number of trading retail units across the country.  Most pertinently, it highlights the quiet retrenchment taking place within successful non-food chains across the country, whereby multiple smaller stores are being closed in favour of a fewer, larger stores in the big centres.  (nb my blog on the top eighty retail locations, from the start of this year).  It may not feel like it, but independent retailers are increasing their share of the number of trading retail units, with 67% of all stores controlled by indies, up 1% against 2011.

And this is where the retail shake-out in the headline comes in; progressively, over the past four years, the out-of-date leviathans, the single product chains, the superseded-by-technology businesses and the unable-to-respond-to-slicker-competition-or-just-ground-down-by-Amazon retailers have been bought out, merged or closed down.  There’s now a big “middle of the market” gap between the FTSE 100 corporations and the street-fighting new players, but this recessionary climate has been rolling for long enough to allow the biggest players careful application of their cash piles to reshape their store portfolios and integrate first-class online offers, while the new companies have grown up, and been designed from the ground up, for an omnichannel (apologies to John Ryan) world.

A guaranteed better retail tomorrow requires consumer confidence, and we haven’t yet turned that corner.  (With Europe unresolved, the end of austerity is still some way off.)  Nevertheless, we are seeing the birth of a new, fitter retail sector in the UK, with plenty of entrepreneurial spirit among the start-ups, and in larger, imaginatively run, modern businesses like Hotel Chocolat or The Hut.  This is a volatile and fast-changing sector (asked Bill Grimsey), and there will be more business failures, more empty shops, more job losses.  But good retail practice thrives on its ability to adapt, to anticipate changing consumer behaviour and surprise, delight and good value.  The new generation, and the wisest of the old, understand this, and are seizing the opportunity.

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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.