UK retailers show Xmas cheer, fear hangover

09:08, January 05, 2010      

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British retailer Marks & Spencer (M&S) is expected to post its first rise in underlying quarterly sales for more than two years tomorrow, when it kicks off a slew of Christmas trading updates.

Rival clothing retailer Next is also forecast to show an improving sales trend on the same day, while supermarket group J Sainsbury is tipped to report a slight slowdown in sales growth due to lower food price inflation on Thursday.

Britain is taking longer to emerge from recession than most major economies. But the early signs are that if consumers cut back on going out over Christmas, they were prepared to spend a little more on enjoying themselves at home.

Retail bellwether John Lewis reported strong trading at both its department stores and upmarket Waitrose supermarket chain, while grocer Asda said it saw a surge in sales of premium products in a "solid" Christmas.

Some of the boost, however, may have come from shoppers bringing forward purchases ahead of a rise in VAT sales tax on Jan 1, and retailers remain cautious about prospects with taxes expected to rise to rein in government debt.

Shares in British non-food retailers surged heading into the key Christmas trading period but have come off a little from their late November highs.

Weak comparatives

M&S, Britain's biggest clothing retailer by revenue, will deliver a 1.2 percent rise in sales at British stores open at least a year for the 13 weeks to Dec 26 - its fiscal third quarter, according to the average estimate of 11 analysts polled by the company.

That would be the first rise at the group, which also sells food and homeware, since the second quarter of 2007-08.

Any increase, however, would be flattered by weak comparable figures from a year ago when sales fell 7.1 percent.

Analysts expected underlying sales to rise 1.9 percent in general merchandise, which includes clothing and homeware, and 0.5 percent in food.

They will be looking for news on when new chief executive Marc Bolland, poached from grocer Wm Morrison in November, will take the reins, and on when M&S will announce the outcome of its triennial pension valuation.

Next, Sainsbury

Next, Britain's second-biggest clothing retailer, is expected to report underlying sales at its shops were flat to down 1 percent in the 21 weeks ended Dec 24, according to four analysts polled by Reuters.

Sales at its Next Directory home shopping business were tipped to rise 4.2-5.8 percent over the period.

Next said in November that underlying store sales fell 1.3 percent in the first 14 weeks of the period and were up 5.1 percent at Next Directory.

At the time, the group raised full-year profit expectations and said underlying second-half sales would be flat to down 3 percent in stores and up 4-6 percent at Next Directory.

Sainsbury, Britain's third-biggest grocer, is forecast to show a 3.8 percent rise in sales at stores open at least a year, excluding fuel and VAT, for the 13 weeks to Jan 2 - its fiscal third quarter, according to six analysts polled by Reuters.

That would be a slowdown from 5.4 percent in the second quarter, due largely to lower food price inflation, and in line with trends reported by major rivals.

Tesco, Britain's biggest retailer, posted a 2.8 percent rise in underlying British sales for the 13 weeks to Nov 28 and Morrison a 4.3 percent increase for the 13 weeks to Nov 1, both down from previous quarters.

Source: China Daily
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