UK RETAIL ROUNDUP: DSG, Home Retail, Others Extend Xmas Gloom
January 15 2009 - 9:19AM
Dow Jones News
Further evidence emerged Thursday that U.K. retailers -
primarily sellers of houseware, electrical goods as well as car
accessories - did badly over the Christmas holidays, as shoppers
curbed spending amid rising unemployment and fears of a deep
recession.
Electrical-goods group DSG International PLC (DSGI.LN) and Home
Retail Group PLC (HOME.LN) reported sales and margin declines.
Automotive and leisure products retailer Halfords Group PLC
(HFD.LN) Thursday also booked a decline in sales but managed to
improve margins, despite steep discounting across the retail
sector.
Encouraging news did come from 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, with all reporting good
Yule Tide sales growth.
Still, Europe's biggest independent mobile phone retailer
Carphone Warehouse (CPW.LN) said it expects earnings next year to
be flat and set out key strategic goals for the year to March 2010
in light of the weaker business conditions which it sees
continuing.
Trading reports since the start of January show that the U.K.
retailers that did best during Christmas 2008 were supermarkets,
discount retailers, niche and online players as well as businesses
that cater to young, financially unencumbered consumers.
As well as deteriorating trading conditions, retailers -
particularly those that buy goods in Asia - 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.
Attention now moves to scheduled reports from online retailer
ASOS PLC (ASC.LN), Kesa Electricals PLC (KESA.LN), luxury group
Burberry Group PLC (BRBY.LN) and William Morrison Supermarkets PLC
(MRW.LN), which report next week.
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) the following day said it
would close stores and cut jobs in reaction to falling sales and
tightening margins over the key Christmas period. M&S' poor
trading performance was put in to stark relief on Jan. 8 when rival
J Sainsbury PLC (SBRY.LN) unveiled a better-than-expected 4.5% rise
in same-store-sales, excluding fuel, for the fiscal-third quarter
ended Jan. 3, underpinned by its best Christmas results to
date.
Sainsbury's strong performance also made Tesco PLC's (TSCO.LN
U.K. performance look limp. The country's biggest retailer had its
worst U.K. Christmas sales performance since the early 1990s, hurt
by its greater exposure to non-food lines like clothing and
electricals than some of its supermarket rivals.
Tesco said U.K. same-store-sales, excluding fuel, rose a modest
2.5% for the seven weeks to Jan. 10 from a year earlier, bang in
line with market expectations. But Tesco booked an impressive 33%
jump in international sales, helped by favorable exchange rate
movements in Europe, and a particularly strong performance in Asia.
Group sales rose 12%.
Although Christmas 2008 was not the collapse many had feared it
has seen a number of retailers go to the wall.
U.K. sofa retailer Land of Leather PLC (LAN.LN) became the
latest high-profile retail casualty of the U.K.'s struggling
economy on Jan. 12 when it was placed in administration. Others
forced into administration include 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.
Other U.K. retailers that are scheduled to report trading
performances in coming days include:
Mon, Jan. 19 ASOS PLC (ASC.LN) trading update
Tue, Jan. 20: Kesa Electricals PLC (KESA.LN) trading update
Thu, Jan. 22: William Morrison Supermarkets PLC (MRW.LN)
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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