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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 23​ May, 2016​​​​​​​​​​​​​​​​​​

Retailers report strong UK sales in a challenging market​​​​​

Despite the ongoing challenging market conditions, several retailers reported positive results last week. Mothercare posted its first full-year profit in 5 years, with a 51% rise in pre-tax profits to £19.6m for the year to March 26. LFLs rose 3.6% for the UK, while total UK sales were up 0.3%. The positive results reflect the significant progress made following the retailer’s turnaround strategy to optimise its portfolio. Over the last year, Mothercare has refurbished 47 of its stores and closed 19 stores that were underperforming.

TK Maxx owner TJX, Moss Bros and John Lewis have also reported positively. TJX announced a 4% rise in LFLs in Q1 for its international business, which largely comprises the UK. Moss Bros reported LFLs up by 5% for the 15 weeks to mid-May, while the warm weather helped John Lewis’ sales increase by 4% for the week ending May 14. The department store’s electricals and home technology division was the strongest category with sales of wearable technology booming.

In other news, the global luxury market continues to come under pressure. Richemont announced that, while total sales grew 6% in the year to 31 March, with currency rate movements stripped out, sales actually fell by 1%. This follows Burberry’s announcement of an 8% fall in full year profits, and a 1% drop in LFL sales in the year to end of March. Duncan Gilliard, Director, Central London Retail Agency at JLL, commented: “The global luxury market weathered the recession well but we cannot ignore the fact that there are challenges to further growth. Demand from China has been one of the biggest driving forces in the global luxury goods market representing around 31% of global luxury purchases as explored in our recent ‘Destination Retail 2016’ report. The fall in Burberry’s profits could be attributed to China’s more muted economic growth and dip in Chinese international tourism which highlights the importance of having a geographically diversified portfolio which can withstand fluctuations in demand.”

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