Buoyant Christmas ends 2009 on an unexpected high

There’s no denying that 2009 was tough. But for UK retailers, the year ended more cheerfully than it began.

According to the KPMG Retail Sales Monitor, UK retail sales values for December 2009 were up 4.2 percent on a like-for-like basis from December 2008. “These are stronger figures than we dared hope for,” said British Retail Consortium director general Stephen Robertson, adding that the rise represents the “best total sales growth for a December since 2005”.

UK web sales for December were also strong: an estimated £5.46 billion, according to the IMRG Capgemini e-Retail Sales Index, up 17 percent from December 2008.

Online lifts 
high street
With the exception of PC and video games retailer Game, which suffered a sales decline of 12.1 percent for the five-week period ending 9th January, the high street fared rather well this past Christmas. Unlike in 2008—widely touted as the worst Christmas for retailers since at least 1994—store-based sales at multichannel retailers were ahead in 2009. But the direct and online divisions were the true star performers.

At department store Marks & Spencer, for example, overall like-for-like sales for the 13 weeks to Boxing Day were up less than 2 percent from the previous third quarter, whilst online sales climbed 32 percent. It was a similar story at maternity/nursery cataloguer/retailer Mothercare, which saw direct sales for the 13 weeks to 8th January jump 19.5 percent from the previous year and total UK sales in the run-up to Christmas rise a more modest 2.5 percent.

Amongst other positive results: At fashion and decor merchant Next, catalogue and web sales for the 22 weeks to 24th December were up 6.8 percent from the previous year, and retail sales rose 4.6 percent. At computer and electricals retailer DSG International, the parent company of PC World, Dixons, and Currys, like-for-likes were up 8 percent for the 12 weeks to 9th January, whilst like-for-like web sales increased 15 percent, beating market forecasts.

With sales of £1.92 billion for the 18 weeks to 2nd January, general merchandiser Argos also outperformed expectations, according to a statement from parent company Home Retail Group. Total sales were up 3.9 percent compared with the previous year, although like-for-likes rose a scant 0.1 percent. The web accounted for 35 percent of sales, up from 30 percent a year ago.

Strong December sales also helped boost apparel cataloguer/retailer Cotton Traders’ year-round performance. It enjoyed a 31 percent jump in like-for-like sales between 1st December and Boxing Day 2009 compared with the previous year, a surge that compensated for a 20 percent drop in like-for-likes in September and October due to the unseasonably warm weather and the postal strikes. Thanks to the better-than-expected performance at Christmas, Cotton Traders now expects revenue for the year to 31st January to hit £70 million, an 11 percent lift from the previous year.

Jolly results from cataloguers
Christmas was especially merry for etailers and cataloguers. Online marketplace Notonthehighstreet.com is a case in point: It grew year-on-year sales for the 11 weeks to 18th December by 147 percent. Total sales for 2009 rose 183 percent, from £2.27 million in 2008 to £6.43 million. The business, which says it’s on target to reach £13.5 million in turnover this year, attributes much of its success during the past year to an increase in circulation of its print catalogues, from 80,000 to 400,000. Marketing director Jo Kite adds that Notonthehighstreet is upping the frequency of its catalogues from three to six a year in 2010 to take advantage of seasonal events and better promote its primary product categories.

Another gifts cataloguer, the Handpicked Collection, outperformed its Christmas forecast by 27 percent and reported a 46 percent like-for-like annual sales rise. The company credits ongoing search engine optimisation efforts on its website for much of its success, describing it as a “key factor of growth” in a statement. 

Also among the winners is the Hut Group. The home entertainment specialist enjoyed a 188 percent jump in the number of orders processed in the six weeks leading up to Christmas 2009 compared with 2008. Without disclosing specifics, the company stated that turnover benefited from “a similar uplift”.

Once again discount fashion cataloguer 
M and M Direct performed well during its key trading period. The company shipped 836,000 orders during the festive season—a 20.3 percent rise from Christmas 2008. It also enjoyed a 21 percent sales uplift for the 10 weeks ended 3rd January. Bolstered by its continuing growth, M and M is planning further expansion in 2010, most notably launching a German-language website in the coming months. 

Christmas was also merry and bright 
for general merchandiser Shop Direct Group, the owner of Woolworths, Littlewoods, and Very. Sales for the six-week period to 1st January were up 
6.3 percent on the previous year, and margin growth was “significantly ahead 
of sales growth” as a result of less 
clearance activity.

Eco-friendly fashion etailer Adili also had a tighter focus on margin at Christmas. In July and August, keen to drive cash into the business, Adili engaged in heavy discounting. Since then the company, which trades as Ascension, has shifted away from sales and markdowns, but it still managed to deliver a year-on-year sales increase of 36 percent for November and December.

Gross margin at multititle mailer 
N Brown Group dipped by 0.3 percent for the 19 weeks to 9th January compared with the previous year due to increased provisions for bad debt. Sales continued to perform well, however, up 4.9 percent from the previous year. Comparable revenue, which excludes sales from the German division of women’s fashion brand Simply Be and recently acquired menswear retailer High & Mighty, rose 3.6 percent.

Though it faced tough comparables—up against 118 percent growth in the nine weeks to 16th January 2009—fashion etailer Asos.com continued to defy the recession by meeting all its targets. It posted a year-on-year sales rise for the five weeks to 3rd January of 30 percent; for the 42 weeks to 17th January, sales rose 38 percent. Analysts are predicting a 41.8 percent increase in pretax profit for the fiscal year ending March 2010, from £14.1 million to £20 million.

Even some companies that posted sale declines will have fond memories of Christmas 2009. For instance, fourth-quarter sales at multititle mailer Flying Brands fell more than 37 percent, to £6.79 million for the three months to 1st January. But because the decline was due largely to a focus on more-profitable customers and an end to unprofitable recruitment, the company expects to exceed profit expectations for the year. Its Flying Flowers brand was on target for the first time in “several years”, despite a 32.3 percent tumble in sales, to £3.58 million. Sales in the gardening division, which includes Gardening Direct, fell 18.4 percent, to £1.51 million. The entertainment division, which includes the Listen2 audiobooks business, saw sales decline by 15.6 percent, to £1.51 million. This year will see Flying Brands focus on “growing revenue, customer numbers, and profits in our core brands”.