Mixed fortunes on the high street

So, the first of presumably several profit warnings has emerged from the high street - but it's not all bad news.

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Last Updated: 06 Nov 2012

DSG said this morning that its full year profits were likely to come in £40m-£50m below the expected total of about £300m after a ‘disappointing’ Christmas trading period. Chairman Sir John Collins said his company had real problems shifting laptops in the weeks leading up to Christmas (probably not helped by those absolutely terrible TV adverts it was running). Only games consoles and digital photo frames sold well in the run-up to Christmas, and although things did pick up slightly in the post-Christmas sales, the heavy discounting didn’t do margins much good. In fact, the only real bright spark was the performance of DSG’s online business, where sales were up 31% on last year.

Next has also been in the wars. Its total retail sales were down 0.3% in the second half of 2007, with existing stores seeing a fall of 3.2% - and it’s unlikely to return to sales growth this year, it admitted today. It did manage to record an overall increase in sales, but only because revenues at its mail order service Next Directory rose 2.2% during the period. However, the company was putting a brave face on it this morning – thanks to improved cost control, it expects annual profits to be about 5% up on last year, slightly better than expected.

So it’s not all doom and gloom. And elsewhere on the high street there do seem to be a few retailers who have actually done pretty well over the Christmas period. Majestic, for one – the wine seller said this morning that its like-for-like sales were up 4.1% in December. John Lewis (and its food arm Waitrose) appears to be another success story – last week the department store chain said that it had enjoyed its ‘best Christmas ever’, with like-for-like sales up 6.1% in the week to December 22.

In fact, things went so well that each member of staff is reportedly in line for a bonus of £2200. So, if you’re wondering why the checkout operators are looking so cheerful when you go into Waitrose this weekend, now you know.

It seems pretty clear from these figures what’s going on in the high street. Things aren’t looking quite as rosy as they were this time last year. But the good shops – the ones with a great brand, the right products and a distinctive offering – are still doing well. And the less good ones are struggling.

Take DSG – who’s going to buy their new laptop in Currys when they can find a better price, and an infinitely better shopping experience, by buying online instead? It should take a leaf out of Apple's book - its stores look so good that it's actually a pleasure to shop there, which presumably explains why they account for about a sixth of Apple's total sales. So it can be done...

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