Our regular column shining a light on retail trends reflects back on the post Christmas 2023 trading reports and what they mean.
For the last few years in January, February and March I like to review all the retail Christmas trading reports (I’m lots of fun at parties). There’s normally lots of bluster, fluff and sizzle with lovely headline grabbing figures. Consequently, by the end of ‘report season’ most of us can feel quite positive about retail. And it’s important too, because it’s the biggest sector of employment, reveals the overall state of the nation with spending being a massive indicator of overall economic confidence.
Post Christmas trading reports do need to be taken with a pinch or bowl of salt though, just to provide some balance to the rest of the trading reports you may be reading at this time of year. It is always what’s not included in the trading reports that’s worth searching out for.
Sales are vanity and profit is sanity remember?
So how many profit figures are making the headlines or hooks, very few this time of year.
Sales are up by 4%!!! BOOM
But inflation was 6%! Ouch
Sales are up by 25%! BOOM
But LIKE FOR LIKES were flat! Ouch
Sales were up +10%
But only for a 2-week period! Ouchy
Now we all know for many years retailers only make money in the golden quarter but we also know that period is less quarter-like these days, and more of a golden month. Retail is a high risk trade. Woolworths only made profit in December and survived for years like that, but it only takes a few little mistakes and suddenly the house of cards collapses.
The ONS says retail sales volumes are estimated to have fallen by 3.2% in December 2023, from a rise of 1.4% in November 2023 (revised up from an increase of 1.3%); December’s decrease was the largest monthly fall since January 2021 when coronavirus (Covid-19) restrictions affected sales.
So top line I would say it’s a tricky market. We haven’t seen massive retail failures outside of The Body Shop, even though this one does really sting. An incredible purpose-led brand that lost its way in the retail journey. Next plc, inevitably will scoop up the brand and it will continue as a brand rather than a retailer. And is that such a bad thing anyway?
Retail is brutal. Use a bigger, safer retail brand to manage the costly mechanics of retail and focus on building and highlighting the original identity and raison d’etre. Lush is showing humans exactly how this type of retail can be done at an elite level.
So, let’s have a quick round up of the reports released so far this year – I’ve highlighted some key mechanics including the vital length of performance:
- Tesco gave us a sexy LFL +6.4% (6 weeks)
- Sainsburys reported a +7.4% rise in underlying sales (golden Q) new ‘Next Level’ strategy
- B&M +5% revenue on the Golden Christmas Quarter
- M&S +7.2% total sales growth (13 wks)
- Dunelm revenue jump +4.5% (half year)
- Primark 7% uptick in revenue BUT +2.1% LFL (16 weeks) investing £100m in store estate
- Ocado +7% revenue (full year)
- Superdrug +9.2% sales spiked (4 weeks)
- Booths +8.7% revenue jump (3 weeks)
- Card Factory +7.8% LFL (hayleloya) (8 weeks)
- Pepco (Poundland) +10.8% revenue (GQ) refreshing 150 stores
- Currys ‘robust profit’ +3% LFL (10 weeks)
- Majestic wine +8.1% sales spike (8 weeks)
- Halfords -15.3% dip in LFLs (4 weeks) ouchy
- Superdry -23.3% dip in revenue (half year)
- WHSmiths +5% sales rise (20 weeks)
- Pets at Home +4.3% uptick in revenue (12 weeks)
- SSP (travel) +14% upstick in sales (GQ)
- Morrisons 6.5% EBITDA! (full year to oct LFL +1.8%)
- Waterstones +13% sales BUT profit collapse -77%!
- Body Shop RIP 12 February 2024 (founded 1976) 47 years of joy
- IKEA nothing for Christmas but 2023 +11.9% sales growth +4.5% operating profit & staff getting 10% payrise
- B&Q named highest paying major retailer
- Aldi +9.9% sales (GC) investing £550m in store estate
- Waitrose +4.0% (GQ)
- Lidi 12% sales growth (4 weeks)
- Home Bargains – no figures but an interim report (November) said EBITDA (profit) would be up 7%
- Next +5.7% full price sales (9 weeks) full year profit +4% vs LY
- Boots +9.8% retail sales (quarter to the end of November)
- Iceland +2.9% year on year sales
- John Lewis & Partners (although with no profit-related bonus to prove it) seeing the John Lewis arm achieve sales of £4.8bn at -4% but with Waitrose at +5.5% the overall business achieved modest growth (52 weeks). No mean feat after four years of loss-making and hopefully this upward trajectory continues
- Ted Baker – another retail casualty with it being announced that administrators were being called in on 19 March
My tips when navigating the plethora of trading reports.
Always follow all the food retailers. Food is the biggest chunk of the market and is the biggest reveal of its health.
Be aware revenue, sales, underlying sales, total sales, all have different EXACT definitions. Work out the detail behind the growth.
Check the timeline! Golden quarter is three months in theory. If you’re positive sales figures are for 12 weeks or longer – big win. Anything less than six weeks is manipulatable (I know that isn’t a real word but based on the examples listed above it should be). Retailers change the timeline to suit the update. The negative performances always seem to have a longer timeline.
Words like spiked, jumped, uptick, robust are good for the bingo card only. Ignore them. Notice when it’s down it’s a ‘dip’. Just a little dip. Everything will be fine in the future.
Retail has so much to feel positive about, but recessions hit them hard. The industry makes such a tiny net margin it needs all the help it can get. If you’re happy enough to be working directly with buyers, remember to be kind – you have no idea how difficult their job is. You have no idea how immediately their performance can be assessed. You have no idea how regularly retail companies make mass redundancies this time of year.
Be kind. Have fun. Get happy.
Will Stewart is founder and ceo of The Point.1888.
