William Morrison Supermarkets PLC (MRW.LN) Thursday sealed its
title as the best-performing U.K. supermarket chain over the
holidays, with a better-than-expected increase in sales as it
continued to gain market share, and said its full-year profit
expectations remain unchanged.
Morrison, the U.K.'s fourth-biggest supermarket chain behind
Tesco PLC (TSCO.LN), Asda Group Ltd. and J Sainsbury PLC (SBRY.LN),
said sales at stores open at least a year, excluding fuel, rose
8.2% in the six weeks to Jan. 4 from a year earlier, above analysts
forecasts for a rise of between 7% and 8%.
Morrison's 8.2% rise in third-quarter same-store-sales,
excluding fuel, compares with Tesco PLC's (TSCO.LN) modest 2.5%
rise for the seven weeks to Jan. 10 from a year earlier - its worst
U.K. Christmas sales performance since the early 1990s.
Asda - a wholly-owned subsidiary of Wal-Mart Stores Inc. (WMT)
of the U.S. - previously said its "solid" Christmas trading
performance beat its own sales expectations, despite some industry
predictions that this year would be the worst Christmas for
retailers for more than 20 years. The group didn't release specific
sales figures.
J Sainsbury PLC (SBRY.LN) booked a better-than-expected 4.5%
rise in same-store-sales, excluding fuel, for the 13 weeks ended
Jan. 3, underpinned by its best Christmas results to date.
Unlike Tesco and Asda, Morrison has limited exposure to the
non-food market, which has been hit particularly hard as consumers
cut spending on non-nonessential purchases. Sainsbury's non-food
offering is also fairly small.
Trading reports since the start of January show the U.K.
retailers which did best during Christmas were supermarkets,
discount retailers, niche and online players - as well as
businesses that cater to young, financially unencumbered consumers.
All are bracing for a challenging 2009.
Christms 2008 updates show the economic downturn is hurting even
those companies that cater to the wealthy.
On Tuesday, British fashion house Burberry Group PLC (BRBY.LN)
said it may sack up to 540 staff in Spain and the U.K., about 9% of
its total workforce, as part of its latest cost-cutting plans to
help ride out the economic downturn.
Kesa Electricals PLC (KESA.LN) Tuesday reported a
better-than-expected third-quarter sales performance, thanks
largely to strong post-Christmas trading at its U.K. electronics
chain Comet, but said it expected tough market conditions to
continue and underscored how tough trading conditions are for
sellers of expensive, discretionary items.
That message was echoed Monday when DSG International PLC
(DSGI.LN) said John Allan of Deutsche Post AG (DPW.XE) will take
over as chairman, as Europe's biggest electrical goods retailer
tries to turn itself around after a poor performance in 2008.
DSG is one of the many U.K. retailers hurt by Christmas 2008.
Another is Home Retail Group PLC (HOME.LN) which Thursday reported
sales and margin declines and gave a gloomy outlook.
Automotive and leisure products retailer Halfords Group PLC
(HFD.LN) also booked a decline in sales in its latest quarter but
managed to improve margins despite steep discounting across the
retail sector.
Encouraging Yule Tide reports have come from some, including
catalogue and online home shopping retailer N Brown PLC (BWNG.LN),
DVD, CD and video games chain HMV Group PLC (HMV.LN), baby and
parenting-goods concern Mothercare PLC (MTC.LN) and from Associated
British Foods PLC's (ABF.LN) discount clothing chain Primark.
Online retailing seems to have fared particularly well during
the holidays though.
On Monday, ASOS PLC (ASC.LN) said its sales over the Christmas
period more than doubled and the online fashion retailer also
posted more than doubled sales for the 42 weeks ended Jan. 16.
The U.K. retail holiday trading season kicked-off on Jan. 5 when
both U.K. department store chain John Lewis and London department
store Liberty PLC (LBE.LN) presented encouraging sales reports.
On Jan. 6, Next PLC (NXT.LN), Debenhams PLC (DEB.LN), New Look
and The Co-operative reported better-than-expected Christmas sales
performances. Good holiday sales were also reported by department
store House of Fraser and fashion retailer Peacocks.
Marks & Spencer Group PLC (MKS.LN) on Jan. 7 said it would
close stores and cut jobs in reaction to falling sales and
tightening margins over the key Christmas period.
Although Christmas 2008 was not the collapse many had feared it
has seen a number of retailers go to the wall. They include U.K.
sofa retailer Land of Leather PLC (LAN.LN), china and glass group
Waterford Wedgwood PLC (WTFU.DB), Passion for Perfume Ltd., Adams
Childrenswear Ltd., clothing chain USC, CD, DVD and video game
retailer zavvi, coffee-and-tea purveyor Whittards of Chelsea,
clothing chain the Officers Club, Woolworths Group PLC (WLW.LN) and
furniture retailer MFI.
The question in the months to come is whether spending will dry
up now that Christmas is over and the sales are coming to an
end.
As well as deteriorating trading conditions, U.K. retailers -
particularly those that buy goods in Asia - now face rising costs
due to sterling's falling value versus the dollar. The bulk of the
goods sold in Asia are pegged to the U.S. currency.
Other U.K. retailers scheduled to report trading performances in
coming days include:
Mon, Jan. 26: WH Smith PLC (SMWH.LN) AGM trading update
Tue, Feb. 3: Carpetright PLC trading update
-By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290;
lilly.vitorovich@dowjones.com
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