Tesco leads chorus of retailers with snow worries

Today we got to see just how badly the pre-Christmas snow affected the high street. Even Tesco wasn't immune...

by Emma Haslett
Last Updated: 15 Feb 2013
It’s Super Thursday, the day dozens of retailers reveal their Christmas trading figures – and the headline numbers point to a lot of dashed festive hopes. Some of the country’s largest retailers posted some pretty disappointing results, which they're blaming on the pre-Christmas snow – not least Tesco, which said its like-for-like sales grew at just 0.6%. That’s quite a come-down from last year’s 5.1% figure. And if it’s been this difficult for the nation’s biggest retailer, it's hardly surprising that the smaller fry have been struggling too...

Unsurprisingly, Tesco’s out-of-town stores took the worst hit. While food sales actually rose by 1.5%, the real dent was in ‘non-food’ sales, which are usually stocked in its larger ‘Extra’-sized stores. Analysts reckon the cold snap lost Tesco about £50m worth of sales, although there were at least some encouraging figures from its online business, which saw sales growth of 18%. And that’s despite it having to stop taking orders in some parts of the country just before Christmas, in order to deal with a snow-induced backlog – so it could have been even better.

Tesco wasn't the only retailer to suffer, however. New Look, Thorntons, the Co-op and Game Group have also posted disappointing numbers today. And Halfords said it had been hit by a ‘surprise drop’ in the number of people buying bikes for their children for Christmas - although on the plus side, there was a rise in the number of people buying car maintenance products (bulbs, blades and batteries). Pity they weren't selling sledges too...

Interestingly, while Dixons also had a tough few weeks, it still reported a rush of customers trying to get their big purchases in just before the VAT rise came into effect. So although CEO John Browett admitted that, like most other retailers, the bad weather had taken its toll, the company still saw ‘strong trade’ just after Christmas.

A further glimmer of hope came from Argos and Homebase owner Home Retail. Because even though both stores saw sales dip, they've both managed to keep profit margins up – which means the group as a whole can still be reasonably confident about meeting its earnings forecasts.

But it's a strategy not without its risks. If the only way retailers can protect their margins is by pushing up prices, that's not great news for consumers already trying to deal with higher VAT and soaring fuel prices...

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