Consumers “pulled forward” Christmas gift purchases to take advantage of Black Friday discounting, analysts have told Drapers, as multiple retailers report a slump in festive sales.
John Lewis & Partners reported a 2.3% year-on-year drop in sales over the Christmas period, to £1.1bn, between 17 November 2019 and 4 January 2020, and sales were down 2% on a like-for-like basis. However, the retailer’s online sales increased by 1.4% and overall fashion sales were up 0.1%.
The retailer also announced the departure of its managing director Paula Nickolds as part of the merger of the management with supermarket division Waitrose & Partners.
Analyst Richard Lim, CEO of Retail Economics, said: “These figures confirm that trading is tough, and news that the MD is stepping down could signal just how uncomfortable life is getting.
“[Advertising mascot] Excitable Edgar did little to fire up Christmas sales with declines across non-food and a woeful performance in the online business, which barely showed any signs of growth.
“The later timing of Black Friday may ultimately have been the destructive force at play. Consumers appear to have pulled forward gift purchases to take advantage of deep discounts at the expense of Christmas trading.”
Clothing and home sales at Marks & Spencer dipped by 3.7% year on year to £1bn in the 13 weeks to 28 December, as a result of an “underperformance” in menswear and gifting. Sales for clothing and home were down 1.7% on a like-for-like basis.
M&S recorded a 1.5% increase in online clothing and home revenue for M&S, which it said had been adversely affected by competitor discounting in December.
“While clothing and home lagged behind overall growth, it still improved on previous performances. The major disappointment came in the online business, which barely showed any meaningful signs of growth. Integrating a seamless digital proposition remains the key challenge for the retailer,” said Lim.
CEO of M&S Steve Rowe said: “As we drive a faster pace of change, disappointing one-off issues – notably waste and supply chain in the food business, the shape of buy in menswear and performance in our gifting categories – held us back from delivering a stronger result.”
Joules also reported a poor performance this Christmas, which it blamed on a stock availability issue through the end-of-season Sale event as well as disappointing online sales. Traffic to the brand’s website increased by 8% during the period, but the conversion was “significantly behind expectations”, and sales were down 4.5% year on year over the seven-week Christmas period to 5 January 2020.
“We are disappointed with our inability to fully satisfy our customers’ demand through our online channel during the important Christmas period,” said CEO Nick Jones. “We have identified the root cause of this one-off issue and have taken steps to prevent its reoccurrence.”
Superdry’s group revenue dropped 15.8% in the 10 weeks to 4 January, despite a strong Black Friday. The retailer said this was the result of unprecedented levels of discounting on the high street, subdued consumer demand and shortages of bestselling product.
However, Selfridges bucked the trend, with a strong performance across men’s clothing, beauty, vegan foods and toys, which helped to drive a 5% sales lift at the retailer in the 24 days leading up to Christmas. Menswear sales were up by 11% on last year.
JD Sports Fashion also reported “positive like-for-like sales” over Christmas, particularly across international markets, predicting that full-year profits before tax will be in the upper range of expectations between £403m and £433m.
David Beadle, vice-president at credit ratings agency Moody’s, said: “Christmas trading updates from UK retailers highlight the very competitive environment amid consumers ongoing search for value.
“While earnings growth will accelerate slightly in 2020 compared with the previous year, we still expect profit to continue to decline for a significant minority of retailers and performance to diverge among the European retailers we rate, well over half of them growing less than 2%.”