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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 24​​​​​​​​​​​​ January, 2016​

Christmas Trading Special: LFL growth for over 90% of UK retailers

JLL's annual Christmas Trading Update reveals that despite Brexit fears, fluctuating consumer confidence and declining footfall, the UK retail market benefitted from buoyant Christmas trade. Over 90% of UK retailers and leisure operators who have disclosed performance figures registered positive like-for-like (LFL) annual growth for the key Christmas trading period, with almost half delivering sales growth (either LFL or total) in excess of 5% year-on-year.

There are several mitigating factors, including the extra shopping days as a result of a Sunday Christmas, the relatively weak comparative period last Christmas, and the impact that discounting will have on profits for some. However, a diverse range of retailers, from grocery to department stores to fashion chains, have demonstrated LFL growth, suggesting that the uplift was down to consumer spending patterns, rather than the shifting fortunes of individual companies. This contrasts with the relatively gloomy official statistics for December trade from ONS, which showed sales volumes fell 1.9% in December (the BRC measure was more positive, with 1.0% growth, and appears more in-tune with retailer evidence). These mixed messages highlight the importance of measuring Christmas performance over a broader 2-3 month period.

On paper, the grocers were amongst the big winners this Christmas, as shoppers spent nearly half a billion pounds more in supermarkets compared to last year, with many drawn to a more premium offering. Waitrose, Morrisons, Tesco, M&S Food and Sainsbury’s all reported positive LFLs, with Morrisons topping the table with 2.9% LFL growth. The discounters continued to perform well, with Aldi (which does not report on LFL sales), recording total sales growth of 15% in December. These are clearly promising results, the caveat being that the turnaround for the Big 4 in particular should be set against a backdrop of relatively weak performance the previous year.

The department and variety store sector also saw growth across the board, as their vast product ranges and investment in both in-store experience and digital strategies boosted sales. Fortnum & Mason recorded 16% LFL growth, benefitting from strong growth online (+22%), with e-commerce sales outstripping in-store sales for one day during Christmas, for the first time in its history. House of Fraser reported a 2.7% uplift in LFLs, driven by investments in its online platform (online: +17.8%), and John Lewis reported LFL growth of 2.7% (online: +11.8%). Debenhams’ strategy to shift focus onto beauty, gifting, home and food, with less dependence on fashion proved successful, with 5% LFL growth (online: +17%), while Marks & Spencer reported a 2.3% rise in LFLs for their Clothing and Home departments, helped by five extra trading days of the Christmas sale (online: +9.4%).

Elsewhere, the fashion market recovered well following the early shock of Next’s negative results (total sales: -0.4%). Premium retailers performed particularly strongly, with Burberry, Superdry, Joules, Reiss and Ted Baker all reporting double digit growth. Burberry topped the Christmas trading table, with c.40% LFL growth, boosted by international tourists taking advantage of the weak pound. Pricing was a key driver of performance in the fashion sector, as retailers generally took a more strategic, targeted approach to discounting and promotions over the Christmas period, and reaped the benefits as a result.

In summary, it is clear that the strong retailers with relevant customer propositions and digital strategies continue to outperform. The remainder of 2017 is likely to bring challenges to the retail sector, as the themes we highlighted in our Brexit note, such as rising costs, inflationary pressures, margin pressure and squeezed consumer spending, play out. The perfect storm may be on the horizon, but for the time being, the results from the Christmas period highlight yet again the underlying resilience of the UK consumer. The winners going forward will be those retailers that identify (and grasp) opportunities, where others see only obstacles.​

Retailer / Leisure OperatorTrading PeriodLFL
Sales Growth
Total
Sales Growth
Online Sales Growth
Burberry3 months to 31 Decemberc.40.0%*22%**29.6%
Boux Avenue6 weeks to 24 December16.6% **38.1%
Fortnum & Mason5 weeks to 1 January16.0% 22.0%
Superdry (Group)10 weeks to 7 January14.9%20.6% 
Mountain Warehouse6 weeks to 1 January13.6%28.8%31.8%
Mamas & Papas13 weeks to 25 December11.0%  
Majestic Wine (Retail)10 weeks to 2 January7.5%6.2%**25.0%
B&M Bargains13 weeks to 24 December7.2%*20.5% 
Superdrug5 weeks to 2 January7.2% **47.0%
Halfords (Retail)15 weeks to 13 January7.0%13.1%*16.3%
The Fragrance Shop6 weeks to 31 December6.8%12.6%**15.4%
Greggs13 weeks to 31 December6.4%  
Moss Bros23 weeks to 7 January6.1%7.6%24.9%
Radley6 weeks to 25 December6.0% *18.0%
Dixons Carphone10 weeks to 7 January6.0%  
Debenhams (Group)7 weeks to 7 January5.0%5.0%17.0%
Mitchells & Butlers4 weeks to 7 January4.7%  
Argos15 weeks to 7 January4.0%4.1%13.0%
Hobbs13 weeks to 31 December3.9%14.3%**26.7%
Co-op3 weeks to 31 December3.5%  
Booker Group (Budgens & Londis)16 weeks to 30 December3.2%2.9%10.0%
Morrisons (exc. Fuel)9 weeks to 1 January2.9%2.0%**76.1%
Waitrose (exc. Fuel)6 weeks to 31 December2.8%4.8%0.8%
John Lewis6 weeks to 31 December2.7%4.9%11.8%
House of Fraser6 weeks to 31 December2.7% **17.8%
The Entertainer5 weeks to 31 December2.6%13.5%31.7%
Booths3 weeks to 7 January2.6%1.8% 
Marks & Spencer (Clothing & Home)13 weeks to 31 December2.3%3.1%9.4%
Nisa10 weeks to 1 January2.2%2.7% 
Conviviality6 weeks to 1 January2.1%  
Robert Dyas6 weeks to 24 December2.0%  
Maplin6 weeks to 24 December1.4% 29.3%
Ryman6 weeks to 24 December1.4%  
Mothercare13 weeks to 7 January1.0%0.6%5.5%
Jack WillsDecember1.0%  
WH Smith (Group)21 weeks to 21 January1.0%2.0%**23.2%
Tesco (exc. Fuel)6 weeks to 7 January0.7%0.8%**10.0%
Marks & Spencer (Food)13 weeks to 31 December0.6%5.6% 
Topps Tiles13 weeks to 31 December0.3% **15.2%
Dunelm13 weeks to 31 December0.2%3.3%**21.7%
Pets At Home (Group)12 weeks to 5 January0.1%4.4%**16.8%
Sainsbury's (exc. Fuel)15 weeks to 7 January0.1%0.8%>9.0%
Ernest Jones9 weeks to 31 December-2.2%-1.5% 
Bonmarché5 weeks to 24 December-3.4%-1.5%-14.3%
H Samuel9 weeks to 31 December-4.9%-4.6% 
Boohoo.com4 months to 31 December 31.0% 
Sofa.com (International)12 weeks to 9 January 28.0%38.0%
Joules7 weeks to 8 January22.8%**24.9%
Reiss6 weeks to 7 January 19.7%**26.4%
ASOS4 months to 31 December 18.0% 
Ted Baker (International)8 weeks to 7 January 17.9%35.0%
Ann Summers1 week to 26 December 17.2%54.0%
Hotel Chocolat (Group)13 weeks to 25 December 16.2%**17.1%
AldiDecember >15.0% 
Findel (Group)16 weeks to 21 January >11.0%**18.2%
Primark (International)16 weeks to 7 January 11.0% 
Jigsaw (International)5 weeks to 31 December 10.0% 
Shop Direct7 weeks to 23 December *9.0% 
AO World3 months to 31 December 8.9% 
FatFace54 days to 24 December 7.9%**7.6%
Iceland12 weeks to 31 December 4.7% 
N Brown (Group)18 weeks to 31 December 4.1%12.0%
Next54 days to 24 December -0.4%^5.1%
GAME Digital (Group)3 weeks to 7 January -1.6%10.3%
*Group
**Conlumino - Verdict estimate
^Directory

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