What a difference a year makes. Twelve months ago retailers were bemoaning the worst Christmas sales in living memory, while even M&S was shedding staff and closing stores. Fast-forward twelve months and the picture looks a bit brighter: John Lewis says its like-for-like Christmas sales were 13% up on last year, while Next has also posted better-than-expected figures. So it looks as though low inflation and interest rates are still persuading the great British shopper to keep spending. But let's not crack open the New Year bubbly just yet: with VAT back up to 17.5% and more tax hikes on the horizon later in the year, 2010 will still be a tough old year for the high street...
Nonetheless, John Lewis has good reason to be feeling pretty pleased with itself, after flogging more than £100m of stock in four of the five weeks leading up to Christmas. Even compared with two years ago (i.e. ignoring last year’s dismal figures), sales were up more than 10%, while Waitrose (with sales up 9%) is now the fastest-growing supermarket in the UK. And even one-time laggard Next had a positive story to tell: sales between July and Christmas Eve were up by (a not-quite-so impressive) 3.2%, allowing it increase its profit forecast from £472m to about £500m. Smiles all round, then.
But despite these bumper sales, both firms reckon that high street retailers aren’t out of the woods just yet. John Lewis MD Andy Street is expecting a tough 2010, with performance likely to be flat in the coming months, and predicted a ‘long slow recovery’ over the course of the next year. Next boss Simon Wolfson also expressed concerns that measures to tackle the black hole in the UK’s public finances – i.e. tax hikes, spending cuts and higher interest rates – could force consumers to tighten the purse strings once more. Perhaps he should have a word with his mate David Cameron about it.
Still, John Lewis and Next have certainly thrown down the gauntlet to other high street giants like M&S and Sainsbury’s, who are reporting their own results on Wednesday and Thursday respectively. Let’s hope for outgoing executive chairman Stuart Rose’s sake that the M&S figures are rather better than last year’s.
In today's bulletin:
John Lewis and Next bring festive cheer with bumper sales
Kraft sweetens Cadbury bid as Nestle distances itself
AOL Time Warner boss apologises for 'worst deal of the century'
Editor's blog: Paddy Power has a funny idea of the 'craic'
A Life of Enterprise: Sleep your way to success