Retail shares plummet as white Christmas takes its toll

Some may be dreaming of a white Christmas, but it's more like a nightmare for retailers. And consumers aren't loving it, either.

by Emma Haslett
Last Updated: 06 Nov 2012
Troubled retailers who thought the pre-Christmas rush might shore up flagging sales have no doubt been bitterly disappointed by the blizzards that struck Britain’s high street this week with all the force of Santa’s reindeer at full-pelt. And investors are clearly none-too-confident either: shares in some of the UK’s biggest retailers have plunged in the last couple of days. Predictably, it’s retailers that were already struggling whose shares have suffered the most, with HMV down 9.5% and Dixons down 6%. But more reliable performers like Marks & Spencer, Tesco and WH Smith are also down. None of which is really a surprise, given the current state of consumer confidence...

Granted, high streets may not be experiencing the usual mad festive dash, but the problem isn’t just that the weather’s putting off consumers – it’s also that stores’ supply chains are being disrupted. So while customers are still turning up, retailers don’t necessarily have what they want. And with a mere four shopping days before the rush is over for another year, there have already been whispers that several of the UK’s weaker retail groups might be forced to issue profit warnings before the big day.  

Clothing retailer Alexon is one of the earliest casualties. Shares in the company, which owns brands like Ann Harvey, plummeted this morning after like-for-like sales dropped by just under 20% (ouch) in the three weeks to December 18. Revenue was also down, by 4.7%, while the company added that it’s expecting profits for the 12 months to the end of January 2011 to be £1.5m lower than expected. Given that its primary demographic is ‘older’ women who can’t necessarily make it to the shops in icy conditions, Alexon was always likely to be one of the first high street retailers to feel the winter chill – but it doesn’t bode well for other retailers.

Particularly as consumers aren’t exactly feeling great about the next few months. In fact, new figures have shown that while consumer confidence has stayed roughly the same since this time last year, it’s masking a lot of doubt about next year. The monthly GsK NOP consumer confidence index (try remembering all that when you’ve had one mulled wine too many) is at 21, which is only two points lower than this time last year – but that’s mainly down to people getting their big purchases, of things like TVs and furniture, in before January's VAT hike.

Less encouraging is another measure, of people’s confidence in their personal financial situations over the last year and for the next year – both of which have dropped. Confidence in the ‘general economy’, both over the last 12 months and for the next 12 months was also down, as was the ‘now is a good time to save’ measure. So it looks like retailers may need to drown a few sorrows over the Christmas period. Not very festive, is it?

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