Weekly Retail & Leisure News - 06 April, 2018
In a week of numerous retailer trading statements, the majority have reported sales growth of some form, albeit often at the expense of profitability. The Entertainer has maintained its recent resilient growth, and continues to outperform the UK toys & games market, recording online sales up 30% in its financial year, which contributed to 6.8% total sales growth. Game Digital, meanwhile, reported revenue up 3.9% but pre-tax profit down 26% for its H1, driven by a 56% fall in pre-tax profit across its core retail division.
In the challenging big ticket market, DFS recorded pre-tax profits down 58% to £7m in its H1, despite sales improving 4.1% as a result of the acquisitions of Sofology and several Multiyork assets. Topps Tiles posted a 0.6% LFL sales gain during the half year to end-March, despite sales falling 2.2% during a ‘challenging’ second quarter. While both businesses warned of the testing market conditions, they remain cautious but optimistic for the remainder of the year.
What is clear is that profitable growth is becoming increasingly hard to achieve for retailers, regardless of the sector. This is undoubtedly a major contributing factor to the raft of CVAs and store closures announced since the start of the year. The latest casualty, Conviviality (following on from Toys R Us, Maplin, Mothercare, New Look, Prezzo and Select, amongst others), highlights the headwinds facing the market, including surging operating costs and ever-changing consumer spending patterns. It also demonstrates that anything other than retailing excellence will be brutally exposed in this environment. However, there is an element of ‘no pain, no gain’ here, and retailers that emerge from CVA will be a step closer to profitability, and arguably be more ‘fit for purpose’ as the industry continues its inexorable transition to an omni-channel future.
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Director, Head of Retail Research (UK & EMEA)
+44 (0)20 3147 1155
Director, Head of UK Retail & Leisure
+44 (0)20 7318 7838