It will be a good Christmas for John Lewis, which posted record weekly sales. Other retailers are predicting a less profitable holiday season, whilst their high street counterpart saw sales rise by 8.4% in comparison with last year at £91.1m in the week to 9 December. “The cold weather and onset of the party season are having a strong impact on fashion sales,” said John Lewis. The news comes as seven other retailers have issued profit warnings in the run up to Christmas, says Ernst & Young.
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Recently Woolworths said it needed a good Christmas to meet “the lower end” of full-year targets. Meanwhile figures from John Lewis show the co-operative’s menswear sales grew by 8% year-on-year in the past week and “women’s fashions from party dresses to shoes [are] selling strongly”. A recent report by Ernst & Young said “many High Street retailers will need a dramatic turnaround this Christmas to save their year after a weak summer and autumn”.
Retailers face many pressures, “including a drop in the proportion of disposable income spent on the high street, falling from 38% in 1995 to 34% today,” said Keith McGregor, corporate restructuring partner at Ernst & Young. In addition High Street stores face greater rivalry from online outlets, with internet spending tipped to grow by 40% this Christmas period. Large supermarkets, which provide “a wider range of non-grocery items at cheaper prices” also pose a threat.
This view echoes an earlier warning from the British Retail Consortium (BRC) that seasonal shopping will not pick up until the last 10 to 14 days before Christmas. Some High Street chains started offering price discounts as early as mid-November, in a bid to challenge slow sales. Major retailers, including Selfridges, Liberty and Gap are opting for ‘secret’ sales, with 20 per cent discount vouchers being distributed by email.