Weekly Retail & Leisure News - 13 June, 2016
In positive news for the UK retail market, May's UK retail sales rose 0.5% on a LFL basis, after two months of negative performance, according to the BRC. Total retail sales increased by 1.4% and footfall rose 0.3% YoY in the month. Increased spending was driven by warm weather, with the clothing sector in particular benefiting. The news of a pickup in sales may calm fears that households are curbing spending ahead of the EU referendum this month.
In the grocery sector, pressure is likely to continue for the Big Four after the launch of AmazonFresh in London last week. Amazon plans to extend the food delivery service to other big cities in the UK, although no timeframe has been given for the expansion. A number of traditional operators in the sector are implementing new strategies to counter the strengthening competition. Sainsbury's, which saw LFLs dip 0.8% in Q2 to June 4, has scrapped its 'Brand Match' offer and committed to lower regular prices. Tesco has also recently announced that it will sell off its restaurant chain Giraffe, and its 95% stake in Turkish grocery business Kipa.
Elsewhere, despite ongoing challenges in the market, retailers with strong and relevant customer propositions continue to announce positive trading results. New Look's UK LFLs rose 3.4% in the year to March 26, and it reported a 16.8% increase in pre-tax profit to £59.1m, largely driven by its expansion in China. WH Smith reported overall group sales grew by 2% during its Q2 to June 4, as LFLs in its travel business grew by 3%, offsetting a 3% decline in LFLs in its high street business. And at Home Retail Group, LFLs grew by 0.1% while total sales grew 2.6% to £868m during Q2 to May 28; online sales increased by 16% in the period and now account for half of total revenues.
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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
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