Christmas retail sales disappointing

The Momentum UK Team 8 January 2014

Many retailers’ profits were substantially lower than expected this Christmas with sales dropping by 2.2% last month, according to accountancy firm BDO.

John Lewis Christmas 2013 television advert stillDespite disappointing performance, a handful of stores came out as winners over the festive period.

House of Fraser enjoyed its best ever Christmas takings, with the last minute rush upping their sales by 7.3%. The group, which has 61 stores across Britain and Ireland, slashed its prices over the Christmas period, by as much as 50% on some products.

House of Fraser Chief Executive, John King, commented:

"We are delighted with our Christmas trading and are pleased to report another record performance despite a more competitive environment.

"As we expected, the peak Christmas trading came late, however it was the best we have ever recorded."

John Lewis also reported an increase in sales this year, and sales were up by 7.2% for the five weeks of December, leading to total sales of £734m. John Lewis’ Christmas advert, ‘The Bear & The Hare’, which told the story of a bear who had never seen Christmas, became an instant hit this year, and is likely to be at least partially responsible for their great performance. This heartwarming stop-animation advert cost 1 million to make, and another 6 million in airtime and distribution.

Similarly Next has raised its forecasts after healthy Christmas sales, with a 12% rise between 1st November and 24th December.

Next’s Lord Wolfson commented:

“As far as the consumer environment is concerned, it seems likely that the economy will continue to steadily improve with strong employment numbers driving a general recovery.”

Debenhams were not so lucky, and they have reported that profits are likely to be down by 15m as the expected Christmas rush never they were waiting for never appeared. Marks & Spencer has also reported a slump in sales compared to previous years, and the store reportedly offered unprecedentedly large discounts before Christmas in a bid to increase takings.

Over the Christmas period PriceWaterhouseCoopers announced that 63% of the high street were promoting sales and offers early as they vied for money from consumers that were strapped for cash.

Despite all this, British businesses are optimistic about the year ahead, according to a survey by Lloyds Bank. The survey questioned more than 1,500 firms, and showed that confidence is at its highest since January 1994, with forecasts looking bright for sales and profits in the upcoming months.

-'John Lewis Christmas 2013 television advert still' image courtesy of John Lewis' Media Centre.