High street stalwarts flagging?

Another week, and more tales of woe from the high street. This time it's Marks & Spencer and Sainsbury's in the firing line...

Last Updated: 06 Nov 2012

Apparently the two high street giants are both set to report disappointing Christmas sales figures in their trading updates this week. Since M&S and Sainsbury’s have hardly put a financial foot wrong in the last couple of years, this will inevitably provoke further fears that the high street is doomed to total meltdown. And we thought taking down our Christmas decorations was depressing…

According to the Sunday Times, M&S will report its first drop in like-for-like sales for nine quarters on Wednesday, after suffering its worst Christmas for two years. And this morning the Times tells us that Sainsbury’s failed to hit its internal sales and profit targets in the run-up to Christmas, as it paid the price for heavy discounting in an attempt to get customers through the door. Things could be worse – it’s apparently still on course to meet the City’s profit expectations – but it does seem to be losing out in the price war that’s going on in this fiercely competitive sector.

All this doom and gloom has certainly spooked investors. Shares in the retail sector plummeted this morning, with Sainsbury’s down 8% at one point this morning to 375p, a 12-month low, while M&S fell 5% to its lowest level in two years.

But there are some beacons of light. Last week we heard that Majestic had out-performed the market over Christmas, while computer store Game and department stores John Lewis and Selfridges also seem to have played a blinder. And apparently one of the biggest winners this Christmas is likely to be Morrison’s, the supermarket chain that the City wouldn’t touch with a bargepole a year ago. With a new executive team at the helm and a big re-design of its stores pretty much complete, Morrison’s is now starting to reap the rewards. It’s even taking customers off its bigger rivals in the south – something which seemed unthinkable back when it was struggling to integrate Safeway.

Then of course there’s Tesco, which always seems to plough ahead regardless (although it’s not published its Christmas results yet – bad news there will really send the doom-mongers into overdrive). After today’s falls Tesco is now worth more than all of its quoted rivals combined, something that won’t be helping Justin King’s mood this morning as he tucks into his (no doubt heavily-discounted) muesli...

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