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High street troubles laid bare

By James Pugh | Business | Published:

The troubles hitting the high street have been laid bare this week as a cluster of Britain's biggest brands reported disappointing festive trading figures.

Marks & Spencer, Debenhams, B&M and Mothercare were among the big name retailers which saw sales drop.

The Christmas trading period has simply reinforced what we already knew about the health of the high street – that trading is tough, that those with decent online operations enjoy some degree of protection, and that the great shake-up on the high street that has already claimed the likes of Maplin may have only just begun.

Against a backdrop of rising rents, business rates, a shift to online shopping and diminishing consumer confidence, retailers have been battling to win customers over the crucial trading period.

But the retail sector endured its worst December since the financial crisis, and this has been borne out in some dire trading updates and the collapse of HMV.

Several firms went bust last year, and 2019 has started with John Lewis saying it is considering axing its bonus, while Debenhams and Marks & Spencer continue to struggle.

Marks & Spencer recorded slides in both clothing and food sales over its Christmas quarter, despite insisting it is seeing "encouraging early signs" of improvement.

It said like-for-like clothing and home sales dropped 2.4 per cent over the 13 weeks to December 29 while comparable food sales fell 2.1 per cent. Total clothing and home sales fell by 4.8 per cent as it was knocked by a raft of store closures under its overhaul. It was also stung by unusually warm weather and falling consumer confidence in November.

Chief executive Steve Rowe said: "Against the backdrop of well-publicised difficult market conditions, our performance remained steady across the period.

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"Our food business traded successfully over Christmas as customers responded to improved value."

Debenhams served up another set of dismal results over Christmas, recording a 3.4 per cent decline in like-for-like in the six weeks to January 5, weighed down by the UK where sales were 3.6 per cent lower due to weaker footfall.

The company warned that the UK trading environment is still "volatile", with savvy consumers actively seeking out discounts.

Chief executive Sergio Bucher said the results were the "best possible outcome" in an uncertain time for retailers.

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Mothercare's UK sales dropped like a stone in the third quarter – which includes Christmas – as the beleaguered retailer cut back on promotions amid its dramatic transformation plan.

In the 13 weeks to January 5, UK like-for-like sales plummeted 11.4 per cent. Mothercare said this reflected a mix of consumer caution and less discounting compared to the previous year which was boosted by aggressive promotional activity. Total group sales, including international, were down 18 per cent in the period.

Bargain retailer B&M reported a 1.6 per cent fall in like-for-like revenues over the 13 weeks to December 29. However, it said comparable sales lifted 1.2 per cent in December after a "difficult" November.

But it wasn't all doom and gloom for retailers. As ever, the high street was divided into winners as well as losers.

In the 52 weeks to 29 December, Greggs’ sales rose by 7.2 per cent, while John Lewis saw like-for-like sales grow one per cent in the seven weeks to January 5.

Snapping at the heels of the big supermarkets, discounters Aldi and Lidl continued to attract new shoppers. Two thirds of British shoppers visited one of the retailers during the seasonal period and Aldi reported its best ever week in the UK as sales rose 10 per cent.

Fashion and home retailer Next may have seen high street store sales slump by 9.2 per cent over Christmas, but this was offset by a 15.2 per cent surge online.

Christmas sales at Ted Baker increased by 12.2 per cent, with particularly strong digital growth of 18.7 per cent.

James Pugh

By James Pugh
@JamesP_Star

Shropshire Star Business and Farming Editor.

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