Two of the UKs leading retailers experienced starkly different Christmas trading patterns figures released this week reveal. John Lewis has reported “outstanding” results, setting a new sales record in the crucial week before Christmas. On the other hand Next has announced “disappointing” sales in its High Street commercial properties and blamed a frenzy of discounting by its rivals for the lower than expected profits.
John Lewis reports a 9.3% rise in year on year sales in its commercial properties over the Christmas trading period. The company’s stores took £596 million in the five weeks up to December 31, including the record £133.1 million in the week up to December 24. In addition online sales rose by a huge 27.9% over the same period.
Retail Director Andrew Murphy expressed his satisfaction with the results but acknowledged that they had been achieved in extremely challenging conditions. He said; “This year has been a battle every step of the way. We are delighted we are going to come out among the top performers this Christmas. That doesn’t change the fact it has been a difficult year.” At the same time John Lewis announced that the annual bonus paid to staff would be less this year due to the cost of generating sales.
Next, meanwhile, announced a 2.7% fall in High Street sales between August and the end of December. Chief Executive Lord Wolfson said; “December was definitely disappointing, as we didn’t see a boost in the weeks that we saw heavy snow last year.” He went on to blame unplanned heavy discounting by rivals which began early this year, as retail commercial properties attempted to off-load unsold winter clothes after a mild autumn. Next has a policy of refusing to discount before Christmas in order to include more items in its Boxing Day sales.
Analysts agree that this may be a factor in Next’s poorer than expected performance but they also suggest it may have more to do with a general reluctance of consumers to spend over the festive period. Indeed Lord Wofson himself speculates “Perhaps Britons have learned to spend less over Christmas.” On a brighter note Next, like John Lewis, reported a significant rise in online sales pointing to the growing trend of multi-channel shopping. Despite Next’s Christmas disappointment the company insists that, overall, trade at its retail commercial properties remains bouyant. Next is expected to make annual profits of somewhere in the region of £565 million which can hardly be described as a terrible year.
Nevertheless analysts remain gloomy in the face of both sets of results. Neil Saunders, speaking to the Financial Times, says; “If these are the results for the winners, it paints quite a bleak picture for the rest of the High Street, both on the sales and the margin front.” He goes on to predict that results for a lot of other High Street commercial properties will be “substantially worse.” Both John Lewis and Next seem to share this uninspiring outlook. John Lewis Managing Director, Andy Street says he expects 2012 to be “challenging and volatile” while Lord Wolfson predicts “another tough year.”
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