British retailers claim a not so good holiday business
The first British retailers report a mixed bag of results. The six weeks ending Saturday, January 11, 2014 three of the biggest names in food and fashion report a difficult period, blaming the weak market or extensive promotions for squeezed margins and low profit forecasts
While Tesco PLC, the world’s second largest retailer by sales, reports that full year profit expectations remain within the anticipated range by the market, but the range was much reduced from what was expected only 10 weeks ago. Its fiscal year will be ending in February and the group expects a trading profit of GBP 3.16 million (USD 5.2 million) to a total of GBD 3.42 billion (GBP 3.45 billion). The group witnesses an erosion of its market share in Great Britain because of underinvestment prompting an exodus of customers to revivals at both the top and bottom of the grocery market.
In turn Marks & Spencer catering to refined palates in its food department registered same-store food sales for the eight weeks to Christmas up 1.5 %. But of course we have to look at Marks & Spencer as the largest clothing retailer in Great Britain by value. Turnover in the retailer’s general merchandise division, including clothing and home wear increased 0.5 % in the eight seeks, but the gain came at the expense of margins, dragging down by heavy discounting in the run-up to Christmas. Total same store sales in the third quarter – and due to the unusual warm weather in October, decreased by 0.2 %. Marks & Spencer lags behind rival Next PLC making use of its online business to pull ahead of its rivals in a very competitive retail climate. Marks & Spencer will improve its online capabilities later this year when its proprietary web platform is launched and its mega-warehouse in England’s Midlands will operate at full capacity.
Online sales of non-food items in Great Britain were up 19 % in December as against the same months in 2012 and account now for 18.6 % (16.2 %) of all non-food sales in Great Britain according to the British Retail Consortium. On an annualised basis all retail sales grew in December by 0.4 %.
Children’s retailer Mothercare PLC announced a profit warning and department store Debenhams did the same after a tough Christmas period.