As the trading statement season chugs along, it’s all panning out in a reasonably predictable way. The stronger players have done well. Today, Ted Baker released numbers most others can’t even dream about. Meanwhile, Debenhams’ early profits warning has been greeted with alarm in some quarters, in spite of its recent relatively disappointing trading performance pointing downwards. The same story applies to Mothercare, again warning on profits. Then there is a middle group delivering OK results – Next, Morrisons, Sainsbury’s among them.
Many try to read patterns into these numbers that are not really there. Tech: online is stronger so exposure to online must be key? Yes, but that’s missing the point. The key is the brand – the offering, its relevance and how effectively it’s executed. When one looks at the star performers so far they all have big ticks in these key boxes.Along with Ted, Aldi and Lidl have posted fantastic figures, underlining how they continue to eat market share. The fact that this is largely driven by new store openings also misses the point: market share growth comes at the expense of the competition so it’s a double competitive advantage.
Unlike the growth markets of the past, this one is getting ever tighter so the strong prosper at the expense of the weak. This will dominate the rest of the reporting season. Generally, those retailers who have been trading strongly in the preceding year will do so over Christmas. And the reverse is equally true. Most figures that appear to confound this will usually be explained by changes in reporting periods and/or weak/demanding comparatives.
There is still much more to come. M&S, Tesco, JLP and ABF (Primark) are among those who will attract the most attention. My advice would be to resist reading too much into any. Tesco is looking stronger and will be respectable. Marks will not be quite as bad as some think, but the underlying trading performance will remain lacklustre. JLP will show signs of having to run faster to stand still, as per most preceding months. And Primark will demonstrate that you can still retail successfully without a transactional website, if you tick those boxes I mentioned earlier.
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