The UK’s biggest retailers reported robust Christmas trading this week as December clothing sales showed the strongest year-on-year growth in more than five years, according to the British Retail Consortium.
Department store chain House of Fraser revealed its best-ever Christmas trading performance, fast-fashion retailer New Look boosted both sales and profits over the period and young fashion chain USC returned to EBITDA profitability after a bumper trading boost during December.
Like-for-like retail sales rose 4.2% across all sectors compared with December 2008, when sales dropped 3.3%, said the BRC. Total sales for the month were up 6% against 1.4% the year before.
“These are stronger figures than we would have dared to hope for,” said BRC director general Stephen Robertson. “These are some of the strongest clothing sales figures we have seen in years.”
A cold snap during the run-up to Christmas, after months of unseasonably mild weather, encouraged shoppers to hit the high street in search of cold-weather clothing, as did high levels of discounting and a pressure to get purchases in before the VAT increase on January 1.
Menswear sales outperformed those of womenswear during December, with coats and suits among the top sellers - a trend echoed at lifestyle business Ted Baker and House of Fraser.
“Over the Christmas week we had the biggest-ever sales on menswear,” said House of Fraser chief executive John King. “The best performers were women’s fashion accessories, which were up 20%, and menswear, which was up 12%. Our own brands also did particularly well. On Boxing Day, like-for-like sales were up 27%.”
Ted Baker chief executive Ray Kelvin said: “Typically at Christmas you’d think menswear would do better [due to the gift market]
and that was the case. In womenswear we did very well on dresses and partywear.”
One high street menswear retailer added: “Sales were dominated by casualwear purchases at the younger end of the market. During the post-Christmas Sale, formalwear did very well, driven by employment uncertainty.”
Sales of footwear soared - sales growth was at its highest level since April 2007. Footwear chains including Office, Dune and Barratts grabbed a slice of the action as a season ruled by boots - particularly Wellington and high-leg styles - boosted high-value transactions.
“It was a boot-dominated season,” said Dune executive chairman Daniel Rubin. “Riding and over-the-knee boots were very strong. We underestimated the potential, as they sold enormously well.”
Transactions made by customers rushing to buy before the VAT returned to 17.5% on January 1 also boosted trade.
“We had an excellent four weeks ahead of Christmas,” said Michael Ziff, chief executive and chairman of Stylo, which owns the Barratts and Priceless chains, said: “I did see an influx of shoppers spending to avoid that VAT increase.”
In womenswear, dresses, occasionwear and tops sold well, and sales of leggings and tights increased as the weather turned colder.
Peacocks managing director Tim Bettley added: “Dresses were one of the top sellers and sequins were strong. As it got colder we did well on knitwear and we couldn’t get enough leggings.”
The BRC’s Robertson added: “It’s also important to note the huge rise in internet and home-shopping sales - the biggest rise for 12 months, helped by the bad weather.”
USC said its website made a significant contribution to a positive Christmas performance. “The web has performed exceptionally and recorded significant growth,” said a spokesman. “Margin and sales were up and the business has returned to EBITDA profitability.”
Despite a Christmas cracker where trading was concerned, Robertson predicted no growth in consumer spending in 2010 and declared that retailers “are not out of the woods”, with an increase in income tax in April and uncertainty surrounding the general election expected to hit trade this year. The heavy snowfall at the beginning of the year has also affected sales.
New Look chief executive Carl McPhail echoed the cautious note, despite recording a stellar Christmas. He said: “We remain cautious about consumer spending and expect sentiment to remain subdued.”
Christmas crackers: breakdown of performances by sector
Footwear put in a knockout performance and was the strongest sector across retail, according to the BRC. Colder weather prompted sales of boots and waterproof styles, while occasion footwear also did well. Like-for-like sales at The Dune Group jumped 17.4% in the nine weeks to January 2 and it said trade at the integrated Shoe Studio Group exceeded expectations. Meanwhile, Office reported like-for-like sales up 19% for the six weeks to January 4, with total sales rocketing 30% to £28m.
Figures from the department stores varied, with House of Fraser’s like-for-likes up 7.1% for the eight weeks to January 2 and Debenhams reporting a 0.1% rise in like-for-likes over the 18 weeks to January 2. Gross profit rose at both stores. Both enjoyed a strong response to own-brand clothing, with House of Fraser’s own-brand sales up 33% for the period compared with a 12.7% rise in concession sales.
The value sector enjoyed a bumper Christmas, with strong product and online sales driving growth across the board.
A strong clothing performance helped Tesco notch up a 5.1% like-for-like rise in the six weeks to January 9, while Sainsbury’s reported a 3.7% rise in the 13 weeks to January 2. Peacocks credited its celebrity collaborations and strong online sales for its 8% climb in like-for-likes in the eight weeks to January 2. Matalan’s like-for-likes were up 13.7% in the five weeks to January 2.
Ted Baker’s like-for like sales soared 19.1% from November 1 to December 24 as young fashion cashed in during the festive season, while Blue Inc enjoyed a 7% rise for the three weeks to January 4.
Mainstream High street
It was a mixed Christmas for mainstream players, as New Look’s like-for-likes rose 5.9% in the 14 weeks to January 2. Sales in its home market were also stronger for US casualwear giant Gap, whose international like-for-likes dropped 1% for the five weeks to January 2, while US sales climbed 2%.