Next week we will see Trading Statements begin to emerge and I wanted to offer some words of warning. We already know that John Lewis saw its sales +2.3% up yoy for the week ending 26th December. This will prove to be one of the strongest performances. Next will be the first major retailer to report next week. As always, its figures will be among the very best. Both companies are routinely described as retail bellweathers. They aren’t. A bellweather is meant to be indicator of what will be the norm. These two businesses are in that small minority with brands strong enough to have traded predominantly at full price. Next was one of the few able to opt out of Black Friday.
Christmas Trading Statements are not externally audited. In effect, companies can say whatever they want and choose whatever definitions and criteria they want. Obviously, for quoted companies there is the need to manage expectations and not mislead the market. Nevertheless, there is wriggle room. The numbers are not comparable across companies and sometimes definitions and timeframes can be changed in subtle ways within companies from year to year, rendering those comparisons difficult too. It is human nature to try and paint performance in the best possible light and this year that instinct will be stronger than ever.
After 12 months of back to back discounting, retailers are entering 2016 with too much stock and too little cash. The year has been incredibly tough, Black Friday was a damp squib and Christmas failed to deliver. Returns and refunds will peak over this latest period and statements will rarely if ever take these into account. The health of the industry will undoubtedly be impacted and if the majority of Trading Statements do not reflect this, the questions should be why, and how?
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