Retailers braced for mixed festive results as discounting and poor weather impact sales
With Next, M&S and John Lewis all set to reveal their festive numbers this week, analysts are expecting mixed fortunes.
It’s already looking like a week to forget for M&S after it was revealed that it parted ways with its global director for loyalty & insight Suzanna Broer – who spearheaded the recent launch of the Sparks card – back in November amid claims she allegedly made racist remarks.
And things could be set to get even worse, with analysts expecting the retailer’s general merchandise division to suffer once again when it posts a Christmas trading update on Thursday (7 January).
Retail analyst Nick Bubb is forecasting a 3% drop in like-for-like sales over the festive period, while Nomura expect sales to fall to 5.5% – a drop not far off last year’s 5.8% plunge.
Food has been a shining light for M&S for some time now and the food division is expected to have notched up stellar sales, once again, over Christmas.
M&S’ head of food marketing Nathan Ansell is set to replace Broer. And an M&S spokesman told Marketing Week that its marketer Zoe Hayward, who has been with the upmarket retailer for three years and has previously held positions at the likes of Unilever and Birdseye, has been promoted to replace Ansell as its head of food marketing.
Close rival Next is also expected to have suffered from a difficult Christmas when it addresses the City tomorrow (5 January).
Analysts at Jeffries are expecting Next to post a 4% growth in fourth quarter sales, a fall from 7.6% growth in 2014.
But Shore Capital’s Clive Black still expects Next to have reasons to cheer and for it to replicate a strong Christmas 2014. “Next always defies gravity when it comes to outperforming the rest. It understands its customers and holds firm when it comes to not discounting.”
Unlike M&S, Next refuses to offer discounts until after Boxing Day, something Black says will have boosted its profitability over Christmas.
Fresh from its popular Man on the Moon Christmas advert, John Lewis posted a 2.3 % year-on-year rise in sales in the week to Dec. 26. Previously, it also saw revenues up 7% year-on-year to £171.8m in the week to December 19.
And although analysts are expecting John Lewis to deliver robust festive results this week, it is expected to reveal a weaker performance compared to Christmas 2014.
M&S, John Lewis and Next have all suffered following heavy Black Friday discounting and rainstorms, which both contributed as high street visits fell 1.8% year-on-year [Ipsos Retail] in the week before Christmas.
