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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 12​ October, 2015

Encouraging signs for Tesco

​​​Tesco has posted a -1.1% decrease in first half UK LFLs for the 26 weeks to August 29. Following the -1.3% LFL decline in Q1, Q2’s performance marked an improvement, with LFLs down -1.0%. Given the competition within the market, and on-going price deflation, increases in transactions (1.5%) and volumes (1.4%) in Q2 are also positive signs for Tesco. Despite declining LFLs and the recent growth from the discounters, the ‘Big Four’ still hold over 70% share of the UK grocery market, whereas the discounters only have an 8% share, and their growth is slowing.  

In a busy week for trading updates, a number of other UK retailers have released encouraging results. Dunelm reported a 5.5% increase in LFLs in the 13 weeks to October, as total sales climbed by 12%. Five store openings and strong trading across its Dwell and Sofa Workshop brands helped revenues at DFS rise 7.5% in the year to August. Total sales for Greggs rose 5% and LFLs rose 4.9% in the three months to August, as it opened 65 new stores and closed 47 during the quarter. And Ted Baker announced further international expansion plans after its sales rose to £226.8m in the 28 weeks to August 15.

In other news, George Osborne announced last week that councils in England will be able to keep the proceeds from business rates raised in their area. Tim Vallance, Head of Retail and Leisure at JLL, commented:  “It seems that long overdue fundamental change is being made. The unwieldy and bureaucratic business rates model has been a hindrance to many retailers post-recession; with adequate protections in place it makes sense for councils to have more power and control. Theoretically, we could see our high streets happier, healthier and far more reflective of local demand, but we will see how this will work in practice.”

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