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TMCNet:  2.2% December sales fall at medium-sized stores

[January 06, 2014]

2.2% December sales fall at medium-sized stores

(Guardian (UK) Via Acquire Media NewsEdge) Medium sized retailers had a challenging December with underlying sales in their stores down 2.2% according to the latest figures from accountancy firm BDO's high street sales tracker.

Fashion retailers suffered the most with sales down 4.6% during unseasonable weather and widespread discounting, according to the survey of 85 chains including French Connection, Gap, Hobbs, Paperchase and Conran stores. The retailers surveyed own about 10,000 stores.


The figures suggest encouraging signs for homewares' retailers reporting an 8% increase in underlying sales in December compared with last year.

The poor performance in stores was offset by a 31% rise in off-store sales across all retail groups, in yet another sign of the importance of an online presence.

Don Williams, at BDO, said: "As anticipated, online sales and 'click and collect' were the real success stories this Christmas and these figures illustrate just how critical it is for retailers to invest in online routes to market. Many retailers will feel disappointed with reduced footfall in stores but when the technology is right this shows that this need not be a disaster." The figures from BDO help round out the picture for retailers in December before the publication of figures for a host of listed chains over the coming weeks.

Figures released by John Lewis, House of Fraser, Next and Debenhams show widely differing performances as shoppers chose where to spend their limited cash with care.

John Stevenson, an analyst at Peel Hunt, said: "The core high street fashion market was clearly very promotionally driven before Christmas. M&S will struggle to deliver the sort of numbers we've seen coming out of Next but I don't think their figures will be as poor as Debenhams." Analysts have forecast third quarter like-for-like sales up 1.1% to 2.5% at M&S, as growth in food helps offset weak clothing performance. That would mark a slowdown from the previous quarter. But the biggest fear is that M&S's profit margins will have taken a hit from its week of discounting before Christmas.

M&S's strong food sales are likely to contrast with a tricky Christmas for the leading supermarkets, which are being squeezed between up-market grocers such as Waitrose and discount chains including Aldi and Lidl.

Tesco, the UK's biggest supermarket, is expected to report sales, excluding new store openings and fuel, down between 0.5% and 2.5% for the six weeks to January 4. Sainsbury's enjoyed underlying sales growth through most of 2013, but the retailer, which traditionally outperforms rival chains at Christmas, is thought likely to report a slight decline in underlying quarterly sales on Wednesday.

Separate data from Barclaycard suggested consumer spending growth nearly ground to a halt in the weeks before Christmas as shoppers were only persuaded to splash out on discount days.

Sales growth plunged after the Black Friday and Cyber Monday sales events at the end of November and beginning of December, a 10.4% leap that weekend, followed by growth of 0.9% between December 3 and 17. It then edged marginally higher, to 1.2% in the final six days before Christmas Eve - a fall in real terms.

Spending bounced back only on Christmas and Boxing Day, Barclaycard said, as the sales began in earnest, rising by 13.6%, followed by a 4.8% increase on 27 December.

Captions: 8% Rise in December sales reported by homewares' merchants compared with last year, bucking the trend among general retailers 31% Increase in online and click and collect sales among all retailers, helping to soften dismal Christmas sales performance (c) 2014 Guardian Newspapers Limited.

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