These days style prevails over substance. In our industry, this peaks with the Christmas Trading Statements season. Most of the results are now in and guess what? Most of our retailers are winners!! That’s great news. Because for a few moments back there, I thought this was actually the toughest, most challenging, damaging retail market we have ever seen.
Retail is highly fragmented and pressures do not apply equally. Some retailers are far stronger than others, better led, with stronger brands and business models. Looking at these statements in terms of just winners and losers is far too simplistic. Anyone posting plus numbers is deemed a winner, because they appear to not be losers. But in retail, things are very often not what they seem. Let’s take the big four supermarkets – apparently, they all won. But price inflation was c3.5%, market growth was c3.8% and all four announced sales growth below these numbers. Maybe they didn’t lose, but calling them winners is simply wrong.
In non-foods, Next was called a winner and its figures were regarded as really positive. A year ago Next reported awful Christmas trading numbers and the accompanying profits warning sent the shares down by 10%. So beating those figures this year was the very least to be expected from one of our best run clothing retailers. Next did OK, but no more.
Christmas was weak, as it was always bound to be. There were a handful of genuine winners including Aldi, Lidl, Primark, Joules and Ted Baker. But many retailers “bought” their Christmas sales with heavy discounts. This will only begin to emerge either when audited results come out several months down the line, and/or when quarter day end March arrives and there isn’t enough cash to pay the rent.
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