Tesco forecast to be among few winners when at least 20 businesses issue updates for underwhelming Christmas trade
New Delhi, January 08, 2018: At least 20 retailers will reveal how they performed over the festive period this week, with Tesco expected to be one of the Christmas winners but Marks & Spencer continuing to struggle.
Others due to update investors include Sainsbury’s, Morrisons , John Lewis, House of Fraser and fast-growing discounter B&M. With little sales growth to be found, it is not expected to be a vintage year for any company as consumer confidence and spending power remains weak according to theguardian.com
But hopes of a good performance from online players such as Asos and Amazon, and those with a good delivery service such as Sainsbury’s Argos and John Lewis, are boosted by data from Mastercard that indicates online spending rose 11.5% in December, compared with the same month in 2016. That drove an overall 2.2% rise in sales for December compared with last year, ramping up in the final days before Christmas, according to Mastercard.
Last Wednesday, Next’s shares soared after it reported slightly better than expected sales thanks to belated demand for coats and knitwear when snowy and icy weather hit much of the UK in December.
But on Thursday, hopes of a retail fillip were dashed when Debenhams rushed out a profit warning. It said trading had been hit by heavy discounting on clothing and seasonal gifts with a particularly disappointing start to its post-Christmas sale.
According to reports published theguardian.com kate Calvert, a retail analyst at Investec, said the different experiences of Debenhams and Next indicated that clothing chains which held back from early discounting may have fared better. That may potentially be good news for M&S, which had fewer promotional days in 2017 than the year before, according to Calvert. But she still expects a “mediocre” performance from M&S with clothing sales at established stores down by 3%. “It will be more like Next than Debenhams,” she said.
Richard Hyman, an independent retail analyst, said M&S’s attempts to reduce costs were affecting the quality of its products and were proving unpopular with its generally older shoppers. “The M&S customer is not interested in getting more inferior product for lower prices. They would rather pay a bit more to get something relevant and of decent quality,” he said.
The chain’s food sales are also expected to have been lacklustre as it struggles to compete with rising competition on luxury foods from all the major supermarkets and even discounters Aldi and Lidl. The major chains are trying to fight inflation and the squeeze on shoppers’ spare cash by tempting them to trade down from branded goods to cheaper own label ranges.
Clive Black, an analyst at Shore Capital, expects M&S to be “a laggard” among a more generally positive set of performances from British grocers.
Tesco is expected to be the top performer with sales growth of as much as 3% over Christmas, as Black said the UK’s biggest supermarket group had “stabilised the business and got the basics right on availability and store standards”.
It remains to be seen which grocer will suffer the biggest hit from the surging sales of the discounters – Aldi said sales rose 15% in December as it opened stores and sold more of its more luxurious foods. Black said he believed Sainsbury’s looked the weakest player after it suffered from “gaps on shelves” and an unexciting store environment during the run-up to Christmas.