Monthly Archives: January 2016

Cape Town to get first Dunkin’ Donuts outlet

The consumption boom has tapered off as increasing living costs and poor employment prospects damp confidence, but this has done little to deter consumers from rewarding themselves with small treats.

If the snaking queues at rival Krispy Kreme’s local store are anything to go by, Dunkin’ Donuts will also appeal to South Africans looking for some respite amid a dwindling economy.
Global brands continue to expand into SA, driven by an aspirant middle-class. Starbucks is due to open in March, following the recent launched of Pizza Hut and Domino’s Pizza.
Grand Parade Investments (GPI), which has signed a franchise agreement with Nasdaq-listed Dunkin’ Brands to bring the coffee and doughnut chain, as well as ice cream offering Baskin-Robbins to SA, also holds the country’s Burger King licence.
While the group builds critical mass, the products will be imported, with “finishing” done in stores.
“Our plan is to localise product as soon as we can,” GPI CEO Alan Keet said on Wednesday.
The company has localised 95% of inputs to Burger King already.
With a target of 250 Dunkin’ Donuts and 70 Baskin-Robbins stores, GPI was eyeing mostly high revenue-generating forecourt stores for its roll-out, Mr Keet said.
Time-poor consumers are becoming accustomed to getting their coffee and snack fix from filling stations, with retailers using the platform to grow brand awareness.
Shell and local coffee brand Vida e Caffé, whose joint-venture began in 2013, recently announced the opening of their 100th forecourt store in SA, signalling the rapid emergence of the country’s coffee culture.
“Dunkin’ Donuts, despite its name, is internationally seen as more of a coffee offering,” Mr Keet said. “The coffee market is growing and it has a very aspirational element. You see people in New York walking with their coffee cups – its very trendy and it’s on TV too. Our population are in a rush because of time pressure and commuting, so they are really in a grab-and-go mode.”
Dunkin’ Brands other consumer offering Baskin-Robbins has a presence in more than 50 countries outside the US including India, China and Russia. The speciality ice-cream shops also sell custom ice cream cakes, frozen beverages and ice cream sundaes. Since it was founded in 1945, it has introduced more than 1,000 ice-cream flavours including Strawberry Millefeuille, Wild ‘n Reckless Sherbert and Peppermint Fudge Ribbon.
“The local ice-cream market is big but in the hard scoop category there aren’t too many competitors. The local consumer, especially at the lower end is buying stick and soft serve ice-cream,” Mr Keet said.
GPI, whose long-term margin for Burger King was about 60%, has trimmed back the chain’s expansion plans.
Dirk van Vlaanderen, investment analyst at Kagiso Asset Management, said GPI had gained a lot of valuable experience from the Burger King expansion.
“They will have a much clearer outlook on the speed and location of Dunkin’ Donuts store roll-out. The much smaller size of the Dunkin’ Donuts stores suggests that set-up costs per store should be significantly lower than Burger King stores – several of which are large, drive-throughs,” he said.
“This, combined with the fact we also expect the Dunkin’ Donuts brand to have a significant portion of franchised stores, suggests an overall more prudent and capital-light approach is likely to be employed to the Dunkin’ Donuts roll-out.”
There are 51 Burger King stores – well off the initial target of 100, with the revised target now 85 by the end of June.
“Undoubtedly, 2016 will be a tough year for consumer-facing companies in South Africa but the large number of international QSR brands that have recently began to get a foothold in the South African market are clearly looking to the long-term opportunity of a large emerging and aspirant middle-class in SA,” Mr Van Vlaanderen. 

 

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South Africa’s 5 biggest retailers vs the world

A new report from Deloitte ranks the world’s 250 biggest retail groups, with five South African retailers making the grade.

According to the report, South African retailers have been largely hit by a slowdown in China’s economy, as well as slower growth evident in many emerging markets.
The MEA region had eight retailers represented (including the five from South Africa), which generated composite growth of 19.4%, 4.5 times greater than the Top 250 as a whole.
Acquisitions boosted revenue for two South African retailers.
In August 2014, Woolworths acquired Australian department store chain David Jones, and in March 2015, Steinhoff International bought South African value-oriented clothing and footwear retailer Pepkor.
“Retailers based in Africa and the Middle East have expanded well outside their home countries – although mainly within the region, with the exception of Steinhoff – operating in an average 12.4 countries,” the group said.
“Nearly one-third of their retail revenue came from foreign operations in 2014.”
Biggest retailers in South Africa
Five South African retailers made the cut into the global 250, but only one came close to being in the top 100.
Steinhoff International Holdings was ranked 101st on the list, with 10.2 billion in retail revenue. The group operates in 29 countries, and owns Pepkor and JD Group – two big retailers in south Africa.
Shoprite Holdings is the second biggest retail brand in the country, ranked 105th with $9.9 billion in retail revenue, operating in 15 countries; followed by Pick n Pay, ranked 161st with 6.1 billion in revenue from 7 countries.
The other two South African retailers are Spar Group (180th) with 5.2 billion in revenue, operating in 10 countries; and Woolworths Holdings (187th) with 4.95 billion in revenue, operating in 14 countries.
In the study’s top 50 fastest grower list, Steinhoff is also ranked as the 5th fastest growing global retailer, with a 41.6% compound annual growth rate between 2009 and 2014.
The world’s biggest retailers
# Group Country Countries of operation Retail Revenue (US$m)

1 Wal-Mart Stores USA 28 485 651

2 Costco Wholesale USA 10 112 640

3 The Kroger Co. USA 1 108 465

4 Schwarz Unternehmenstreuhand Germany 26 102 694

5 Tesco UK 13 99 713

6 Carrefour S.A. France 34 98 497

7 Aldi Einkauf GmbH & Co. Germany 17 86 470

8 Metro Germany 32 85 570

9 The Home Depot USA 4 83 176

10 Walgreen Co. USA 2 76 392

11 Target USA 1 72 618

12 Amazon.com USA 14 70 080

13 Groupe Auchan France 13 69 622

14 CVS Health Corporation USA 3 67 798

15 Casino Guichard-Perrachon France 29 64 462

South Africa’s biggest retailers
# Group Country Countries of operation Retail Revenue

101 Steinhoff International South Africa 29 10 240

105 Shoprite South Africa 15 9 960

161 Pick n Pay South Africa 7 6 125

180 Spar South Africa 10 5 210

187 Woolworths South Africa 14 4 950
 

H&M to create new Bluewater statement store

Fashion retailer H&M is to upsize its store at Kent’s Bluewater shopping centre as it looks to create a flagship store for the South East.
The existing Bluewater shop will be increased in size to 40,000 square feet after incorporating an additional 15,000 square feet of space. The extra space will be used by H&M to showcase its full product range and will feature its collaborations with leading fashion designers such as Balmain.
Due to open in November 2016, the statement store is being created by Land Securities building over Bluewater’s central service yard to create an enlarged upper floor and mezzanine. H&M will remain trading from its existing ground floor whilst the works are being carried out. The brand has also taken a unit on Bluewater’s lower Thames Walk, adjacent to House of Fraser, as a short-term menswear store.
Russell Loveland, portfolio director at Land Securities, co-owner and asset manager of Bluewater, said: “Upsizing H&M to create a new statement store has been an objective for some time, as we work to ensure our key brands trade from stores that reflect Bluewater’s position in the industry. H&M’s new store will deliver a great experience for our guests and is a fantastic start to 2016.”
The H&M store is the latest in a series of upsizes at Bluewater such as Next’s new 44,000 square foot store on Thames Walkand Top Shop’s 30,000 square foot store on the upper Rose Gallery.
The news follows a record-breaking 2015 for Bluewater during which time sales reached their highest level since the scheme opened. In addition, 22 brands committed to Bluewater in the year including Hackett, Nespresso, Breitling, Anthropologie and Tesla.

  

Oxford Street to welcome 26 new flagship stores by 2019

One of London’s prime retail areas, Oxford Street, is expected to welcome no less than 26 new flagship stores by the end of 2016 – further cementing the street reputation as one of the top shopping districts in the city.

This new slew of flagship store openings comes after 11 retailers such as JD Sports, Matalan and Jackamo set up shop on Oxford since January 2014, according to real estate agency Savills. International retailers who are slated to open up flagship stores include Stradervarius, slated to open the second quarter of this year, New Balance, aiming to open its first UK store in the third quarter of 2016 and Sketchers, set to open its store early 2017.
26 new flagship stores to open on Oxford Street by 2019
“This proliferation of flagships on Oxford Street is due to the vast number of shoppers the street attracts, which will only increase with the arrival of Crossrail and the key department stores continuing to strengthen their offer with investment and refurbishment programmes,” commented Sam Foyle, director of retail at Savills.
“Landlords on the street have realised this is now the perfect time to capitalise on the increasing footfall and projected increase in spend and worked to truly establish Oxford as one of London and the world’s premier shopping streets alongside Bond and Regent.”
However, in order to accommodate the number of new flagship stores, several existing rental units have been consolidated on Oxford Street, added Savills. For example, three of the flagship stores which opened since early 2014, Zara, JD Sports and Matalan, where the result of the consolidation of 11 smaller units. In order to make way for new flagship stores a further 57 units will be consolidated to create 13 new flagship stores.
“Due to the reduction in the number of retail units we expect to see particularly strong rental growth coming from smaller shops when they become available as there will be limited opportunities,” said Anthony Selwyn, head of central London retail at Savills.
“We also predict locations close to Oxford Street where further investment is made will attract some of the smaller and perhaps more discerning requirements, South Moulton Street, Tottenham Court Road and the northern end of Bond street being the most likely beneficiaries.” 

 

Tesco to close ‘food-to-go’ stores

Tesco will close the two “Food-to-Go” stores in London, after a failed attempt to rival the likes of Pret and Itsu, on 4 March.
The supermarket chain opened the first store towards the end of 2014, following up with a second, smaller version in March last year.
The concept stores were originally launched with tourists and busy officer workers in mind, offering 100 different sandwich options, soups, ready meals and, in the second store’s case, Mexican food choices. Both were designed to feel upmarket, with slim line checkouts ideal for the customer in a hurry.
It is understood that the shops’ prime locations and their extortionate rents had made the sites unprofitable.
“We’re always looking for opportunities to improve our convenience offering in London which is why we trialled two food to go concept stores”, said a spokesman for Tesco.
“As part of the trial, our customers told us they prefer the wider range of products offered in our Express and Metro stores. Closing these stores was a difficult decision and we will of course do everything we can to find alternative roles within Tesco for colleagues affected by this decision.”
Tesco said that it will consult with the 22 staff employed across the branches to find them alternative roles within the company. 

 

Kingfisher targets £500m annual profit with five-year plan

Veronique Laury, CEO of Europe’s largest home-improvement retailer Kingfisher, has put together a strategy that will cost £800m but turn around annual pre-tax profits of £500m, within five years.  
Outlining her initiatives in a statement released on Monday, Laury revealed plans to return £600m to shareholders over three years, in addition to normal dividends. The return will probably take the form of a share buyback.
“The size of the five-year opportunity is significant,” said Laury.
“This plan will leverage the scale of the business by becoming a single, unified company where those customer needs always come first,” chief executive Véronique Laury said.
Kingfisher investors have waited for almost 10 months to learn what rewards they can expect from Laury’s strategy to unify sourcing and operations.
Buying functions will be brought together in one place, using increased buying scale to cut prices and develop a “more unique” range of products. The online arm of the business will also get a revamp. The news comes just a week after Wesfarmers, Australia’s biggest retail group, agreed to buy Homebase from rival business Home Retail Group, putting strain on Kingfisher’s B&Q.  

 

JCPenney has a new plan that could kill Sears

JCPenney is getting back into the appliance business — and that’s terrible news for Sears.

CEO Marvin Ellison, who joined the company from The Home Depot, is leading an effort for the retailer to start selling washers and stoves for the first time in 30 years, Suzanne Kapner at The Wall Street Journal reports.
Ellison discovered that appliances were a top item customers searched for on JCPenney’s website. The retailer will sell about 150 kitchen and laundry items in a test run at 22 stores.
The department store Macy’s is doing a similar test through a partnership with Best Buy.
More competition in the appliance space could be terrible news for Sears, which is already bleeding cash while facing declining sales and a diminished market share.
The retailer’s appliance business is its most successful venture, with a 26% share of US sales. Still, that has fallen from a 33% share in 2006.
If JCPenney’s appliance-program test is successful, it could give customers who frequent both chains one fewer reason to go to Sears.
It’s a blow Sears might not be able to handle.
JCPenneyAPJCPenney has focused mainly on apparel and home goods for the past 30 years.
Many experts believe Sears is past the point of being able to return to its post as a major US retailer. In fact, it’s in danger of not existing at all.
“Sears is like a rudderless ship, devoid of compass heading, manned by a demoralized crew and worth nothing more than the old rotten boards and nails it’s made of,” Doug Stephens, founder of the industry website Retail Prophet and author of “The Retail Revival: Re-Imagining Business for the New Age of Consumerism,” told Business Insider in December.
It’s an ugly time in big-box retail.
Walmart and Macy’s are closing hundreds of stores, and experts think more closings will follow.
Analysts at RBC Capital Markets think that this is part of a larger trend in retail as more customers shop online instead of in stores.
“Macy’s announced store closings could have a number of implications on the overall retail landscape,” the analysts wrote. “We believe Macy’s decision will catalyze other specialty retailers and department stores to take a harder look at their boxes in these underperforming centers.” 

 
 
 

STARBUCKS CEO: We’re witnessing a ‘seismic change’ in retail 

The announcement by Walmart last week that the retailer will close over 100 stores is a fair gauge of the state of American retail.
Sales and earnings are down, but costs for labor are climbing. Macy’s, Nordstrom, and Sears are all limping along.
This downturn hasn’t been lost on Starbucks CEO Howard Schultz. In a quarterly-earnings call on Friday, Schultz laid out his thoughts on the current and future prospects for retail business.
“I think we said three years ago publicly that we began to envision that there would be a seismic change in consumer behavior, and that seismic change was due in large part to e-commerce and smartphone shopping,” said Schultz.
He isn’t alone among executives talking about this trend. Amazon, a bellwether for online shopping, has begun to catch up to, and is expected to pass, major retailers in terms of revenue over the past few years. Even some of the big-box CEOs have started admitting the importance of mobile shopping.
Unlike other CEOs, however, Schultz not only pointed to the current issue, but also worried about the future of retail.
“I think today in the headlines you’ve seen just in the last three weeks store closures of almost 50 Macy’s stores, 150 Walmart stores,” said Schultz, according to a transcript of the call. “You’ve got to ask yourself what’s going to happen to the future of many of those malls that are anchored by those big-box retailers.
The threat is a growing one, since young people are starting to earn and spend more. The issue is that they’re spending more online.
This is in stark contrast to Simon Property Group CEO David Simon, whose company owns 109 malls and 68 outlet centers around the US. According to Simon’s comments on an earnings call in October, he expects in-person retailers to be relevant for future generations.
“Again, I think the millennials offer great opportunity for us,” said Simon. “They’re comfortable with the mall environment. And as their income grows and as they aged and have kids, I think they’ll be loyal mall shoppers, especially given the environment we’re creating.”
But many studies have shown that millennials are doing a significant amount of shopping online, and younger teens, or Generation Z, are even more predisposed to e-commerce.
While Simon may not be worried, Schultz said that his company has taken drastic steps to get out in front of the change. Starbucks has invested in a strong mobile app and website to make online ordering easier.
According to Schultz, the seismic wave is coming to retailers soon, and retailers should get in front of the curve. 

 

Is M&S taking the first step to open shop in Australia?

Marks & Spencer has launched new websites in Australia and New Zealand in its latest bid to push into overseas markets, reported The Guardian.
Australian consumers are already some of the British retailer’s biggest online customers, buying via the retailer’s UK website which delivers to more than 30 countries worldwide.
The new dedicated sites for Australia and New Zealand feature local currency and sizing and have tailored editorial content highlighting items relevant to the local seasons.
“Australia is firmly established as one of our top performing international delivery markets and our new localised website presents a key growth opportunity for our international online business,” said David Walmsley, Director of M&S.com.
The website launch in Australia will be supported with an ad campaign using the tagline “British style for Australian life”.
There has been longstanding speculation that M&S, which is Britain’s biggest clothing retailer, is planning to open a high street store in Australia, although a spokesperson for the high street giant said “While we always look at new opportunities, we have no current plans to open stores in Australia.”
Australia is being viewed as a strong economy with large fashion chains from Zara to H&M flooding there over recent years. For retailers looking to go international beyond Europe and the US, Australia is opportune.  

 

Amazon to create thousands more jobs in Europe and UK

Amazon to create thousands more jobs in Europe and UK in fulfillment, R&D and software development
Amazon is going on a major hiring spree as the etailer ramps up its operation across Europe and the UK.
The retailer said many of the new jobs – of which 2,500 will be in the UK – will help expand its European fulfilment network, as well as focusing on EU-based research and development. The new roles wll also help build better infrastructure to support its growing cloud-computing business. 
Amazon said it would be “hiring up and down the country, including at our head office in London; our three research and development (R&D) centres in Cambridge, Edinburgh and London; our customer service centre in Edinburgh; our 10 fulfilment centres across England, Scotland and Wales; our 24 delivery stations nationwide; and at our new Fashion Photography Studio in London”.
It follows the creation of 10,000 new jobs in Europe throughout 2015, the biggest headcount growth in Amazon’s history, taking its workforce well above 40,000. The hiring spree also coincides with the roll out of Amazon’s grocery delivery service Pantry. 
Xavier Garambois, vie president of Amazon EU Retail, said: “We are seeing stronger demand than ever from our customers all across Europe, and we see lots more opportunity across Amazon’s businesses to invent and invest for the future.
“We created over 10,000 new jobs in 2015 and plan to create several thousand more in 2016 at all education, experience and skill levels, from speech and linguistic scientists to digital media experts to fulfilment centre and customer service associates.”
Amazon has invested over €15bn (£11.4bn) since 2010 on infrastructure and operations in Europe. It recently announced new investments in London for a new UK head office and a new data centre region for Amazon web services customers alongside existing centres in Frankfurt and Dublin.
Computer scientists and software development engineers will also be in the hiring line for centres in the UK and Ireland as well as Germany, The Netherlands, Poland, Romania and Spain.  

 

Amazon has the best customer service in UK

The Institute of Customer Service annual ranking has a new leader after John Lewis fell to its lowest point in seven years. Amazon raised one place to head the list with a score of 86.6, followed by the energy provider Utility Warehouse, a new entrant, and the HSBC-owned online bank First Direct. This is as per the figures released by the Institute of Customer Service. Waitrose placed 5th in the list whereas Aldi claimed 11th spot.
John Lewis has lost its crown as best British company for customer service and has toppled out of the top three for the first time in seven years. The retailer’s score dropped from a chart-topping 87.2 to 84.9 this year, leaving it in sixth place on the semi-annual index from the Institute of Customer Service.
John Lewis, one of the organizations that have consistently delivered excellent levels of customer service and – alongside organizations like Waitrose, Nationwide and M&S Food – has scored higher than 80 in every UK Customer Satisfaction Index since 2013,” the ICS said.
“Challenger brands, often unencumbered by legacy systems and processes, are gaining on their larger competitors by offering straightforward, personal, seamless and quick service experience,” said Jo Causon, chief executive of the Institute of Customer Service. Specsavers and Waitrose rounded out the top five. Cineworld was the highest riser among the top 50, increasing its score by eight points and climbing 115 places to the 50th slot.
Overall, the utilities sector improved the most, gaining 1.9 points on last year, closely followed by insurance companies and food retailers, which added 1.6 and 1.5 points respectively. Non-food retailers held their position as the sector with the highest satisfaction score. Banks and building societies fell by 0.4 points to an average of 78 points despite improving significantly since the banking crisis, the report found.
The top 10 companies for customer service
1 Amazon.co.uk – 86.6
2 Utility Warehouse – 86.4
3 First Direct – 85.7
4 Specsavers – 85.4
5 Waitrose – 85.0
6 John Lewis – 84.9
7 New Look – 84.3
8 SAGA Insurance – 84.1
9 Nationwide – 83.7
10 M&S Food – 83.5
  Amazon, customer service 

 

Home Retail Group accepts Wesfarmers’ £340m bid for Homebase

Home Retail Group, which was recently wooed by Sainsbury’s with an offer to buy Argos, has agreed to sell Homebase to Bunnings: Australia’s largest hardware retailer. The business is owned by conglomerate Wesfarmers, one of Australia’s largest listed companies, and the decision comes just days after a bid was made.
The takeover will see all 265 Homebase stores acquired, making the DIY chain the second largest home improvement and garden retailer in the UK and Ireland, putting it in a position to rival Kingfisher owned B&Q. The acquisition will also mark the debut of Wesfarmers in the UK’s retail industry as well as its first expansion offshore.
“Bunnings is well placed to unlock value from the Homebase business and has a proven track record in delivering growth, both organically and through acquisition,” said Richard Goyder, MD of Wesfarmers.
“The £38bn UK home improvement and garden market is a large and growing market with strong fundamentals. The opportunity to enter this attractive market through the acquisition of Homebase has been comprehensively researched and carefully considered by Wesfarmers and Bunnings,” he added. “The Bunnings team has done a lot of work to make sure it understands the market and the opportunity, including having visited hundreds of stores, spending significant time researching the market and closely studying international retail expansions into the UK and other markets.”
The UK home improvement market is considerably larger than Australia’s, at 1.6 times the size, and a household count three times the size.
Wesfarmers plans to invest £500m to refresh and rebrand the entire estate in a three to five year plan that will see several pilot stores open in the UK. It is expected that the acquisition will have an inconsequential effect on earnings per share and return on equity for three years, after which it is predicts to contribute positively. Predators have been circling Home Retail Group for some time, following Homebase store closures and falling sales at Argos.
The sale of Homebase is expected to close at the end of March and would free up an opportunity for Sainsbury’s to finalise that Argos transaction. 

 

Danube opens flagship store in Dubai

Danube Home, the one-stop retail destination for complete home solutions, has opened its first bespoke store in Dubai, UAE, on Sheikh Zayed Road.
The grand opening ceremony on January 16 was attended by Sheikh Nahyan bin Mubarak Al Nahyan, Minister of Culture, Youth, and Social Development of the UAE; Bollywood actress Shilpa Shetty; and Rizwan Sajan, Anis Sajan and Adel Sajan from Danube.
The global home improvement and home furnishing retail industry is expected to reach an estimated value of $2.292 billion by 2019. The major drivers of this industry are increasing new and existing home sales, increasing disposable income, rising consumer spending, remodelling and renovation of homes, urbanisation, and increasing middle class population. Innovation in products, cost control, supply chain and logistics management will further drive this industry, said a report.
According to some reports, GCC’s home improvement and home furnishing industry will grow significantly during next five years.
The 60,000-sq-ft flagship store showcases the complete product line of the company. Danube Home provides customised solutions across various categories: Living – sofas, bedrooms, chandeliers, home decorations, dinner ware, glassware, bedding, fragrances; Bath – shattafs, mixers, bathroom accessories, massage bathtubs, saunas and bathroom tiles; and garden and outdoor – balcony sets, rattan furniture, gazebos, swings, kids play range.
Furthermore, the customised kitchens, electrical and hardware products complete the range at Danube Home.
Adel Sajan, director, Danube Group, said: “We are extremely pleased to open the flagship store of the region in Dubai. We believe in range, convenience and value hence we provide the best-in-class customised solutions along with our products. Danube Home provides thousands of wallpapers and exclusive curtain designs along with different types of wooden flooring, which one can mix and match to have a truly unique home. All in all, it means that one can actually match the pillows and comforters to curtains and wallpapers.”
“The icing on the cake is free of cost design visualisation and 3D renderings, which can be done for all the customers in record time, by a team of qualified interior designers across showrooms. Customers can just walk in with their floor plans and get their interiors designed based on their individual taste and preferences selecting products from the widest range that we offer. We want to make sure that customers exactly know how the living, bath, garden and outdoor or kitchen would look like even before they buy a product,” said Sajan, Director.
“All our products are very reasonably priced and we have observed that 95 per cent of customers who come to our stores for design creation, actually buy from us. We source products from all over the world- USA, Germany, Turkey, Spain, India, Malaysia, Vietnam, China and Italy to maintain an enticing range.”
Rizwan Sajan, founder and chairman, Danube Group, added: “I congratulate the Danube Home team on the opening of their new store in the region. With this new store, Danube has extended their commitment to offer its customers in the Middle East the best of luxury retail experience.” 

 

Retail Giant Walmart Plans To Shut 269 Stores

Walmart is to shut 269 stores in the US and Latin America after the retail giant said it was reviewing its store network as it faced stiff competition especially from online rival Amazon.

The closures will affect 16,000 workers, 10,000 of them in the US, where 154 locations – most of them small format stores called Walmart Express – are to shut.
The remaining 115 sites are in Latin America, most of them in Brazil.
Walmart, which in the UK owns third-biggest supermarket Asda, has 11,600 stores worldwide.
Chief executive Doug McMillon said: “Actively managing our portfolio of assets is essential to maintaining a healthy business.
“Closing stores is never an easy decision, but it is necessary to keep the company strong and positioned for the future.
“It’s important to remember that we’ll open well more than 300 stores around the world next year.
“So we are committed to growing, but we are being disciplined about it.”
Neil Saunders, head of retail experts Conlumino, said the decision showed how much the retail landscape had changed over the past few years.
“The blunt truth is that while stores remain a vital part of the retail mix, they are not quite as relevant as they used to be,” Mr Saunders said.
“In some areas of the US there was a time when a local Walmart would be the go-to destination for certain products, mainly because of an absence of alternatives.
“The growth of online, and especially of Amazon, has undermined that advantage and has given almost all consumers easy access to a comprehensive and relatively cheap assortment of products.
“Walmart’s decision is part of a larger shift that will be played out across all parts of the retail sector over the coming year and beyond.”
The announcement does not affect the UK, where Walmart’s Asda business is caught up in the fierce price war between the big supermarkets as they come under pressure from discounters Aldi and Lidl. 

 

BHS to lease Oxford Street flagship to Polish fashion giant LPP

BHS has agreed to lease its Oxford Street flagship to Polish giant Lubianiec Piechocki i Partnerzy (LPP) more to follow … 

 

Home Retail to sell Homebase to Australian retailer Wesfarmers for £340m

Home Retail Group has revealed it is in “advance discussions” to sell its Homebase business to Australian retailer Wesfarmers for £340m. 

 

Sainsbury’s comes out on top at Christmas

Sainsbury’s has once again been crowned the best performer of the traditional supermarkets, with its premium Taste The Difference brand posting the largest ever Christmas sales, and straightforward price cuts rather than multi-buy deals attracting an additional 114,000 shoppers, leading to a 0.8% sales increase on last year.
Figures released by Kantar Worldpanel have shown that nearly one in eight British consumers did their single biggest December grocery shop at either Aldi or Lidl.
Lidl was the fastest growing supermarket overall in the 2015 Christmas period with sales up by 18.5%, driven by an expanded premium range which contributed to customers increasing their average basket size by 7% to £17.20. Aldi followed with an increase in sales of 13.3%.
Waitrose, the Co-operative and Sainsbury’s also grew ahead of the market in the 12 weeks to 3 January as sales across the grocery market dropped 0.2% on last year because of continuing price deflation.
Tesco sales fell by 2.7%, while its market share dropped to 28.3%, while Asda and Morrisons also saw their share sliding to 16.2% and 11%.
Kantar Worldpanel said Morrisons’ share loss was expected as it continued to feel the effects of recent store closures, while the retailer had not repeated last year’s Christmas Bonus loyalty cash promotion.
Waitrose benefited from shoppers trading up at Christmas leading to a sales increase of 1.5% and its market share rising to 5.2%.
“Shoppers reaped the benefit of falling prices this Christmas, with groceries 1.8% cheaper than last year,” said Fraser McKevitt, Head of Retail and Consumer Insight at Kantar Worldpanel.
“The amount spent on a typical Christmas dinner fell even faster – down by 2.2% – mainly due to cheaper poultry and traditional vegetable trimmings.
Wednesday 23 December was the single biggest shopping day of the year, but the anticipated uplift from an extra day in the week before Christmas didn’t help the supermarkets overall. Consumers simply delayed their shopping trips later this year, rather than making any extra trips.”
He added: “The discounters are continuing to establish themselves in the minds of British consumers – almost one in eight did their single biggest December shopping trip in Aldi or Lidl, on top of the 15.6 m households who visited at some point in the 12 weeks.
“That is an increase of nearly 1m shoppers on last year, and their combined share is up from 8.3% last year to 9.7%.” 

 

Debenhams reports on its best ever Christmas

Debenhams has hailed its “best ever December and Christmas” for 2015, off the back of stellar sales over the Black Friday weekend and festive trading period.
Like-for-like sales grew 1.9% in the 19 weeks to January 9, up on city predictions of a 0.3% increase. Online sales were up 12% in the period, jumping 36% during the Christmas week, when compared to the year before.
The department store chain processed 220 orders a minute at peak on Black Friday, with online orders up 20% year-on-year.
The retailer has been working to introduce more brands, improve its online delivery service, and cut back on discounting in an attempt to reverse years of declining profits.
For Debenhams, a total of 9m seasonal gifts were sold across the period, including 3m food-related gifts and 2m toys. Lego and Star Wars products were the most popular toys as the high street giant sold over 85,000 Lego Boxes, and 70,000 Star Wars items, including 8,000 light sabers.
As Brits become more health conscious, the demand for fitness products rose and Debenhams reported a 50% jump in well-being products, pushed by Fit Bit sales.
Michael Sharp, outgoing Chief Exec of Debenhams, said: “We have enjoyed a record Christmas trading period including our best ever December and Christmas week.
We are particularly pleased with our performance in beauty and gifts, where we delivered a good result in store, along with strong online sales supported by robust systems, an ever improving supply chain and an imaginative and joined up marketing campaign.”
Sharp, who has been at the retailer for 25 years and boss since 2011, is due to step down some time this year. 

 

Foschini Group wears the season well

Shares in SA’s biggest retailers have tracked downwards in the past few months on expectations that weak economic growth and a rising interest rate cycle would curb consumer spending. The group’s last price peak was R201.78 in April.

The group owns brands including Foschini, Markham, Totalsports, @Home and American Swiss. Last January, it bought an 85% stake in UK women’s fashion chain Phase Eight. At end-September, it had 2,913 outlets in 31 countries including the 523 Phase Eight stores.
In a trading update, group CE Doug Murray said between 29 November and 26 December, group sales had risen 27.2% compared with a year ago. Excluding Phase Eight, turnover growth was 13.5%, and growth on a like-for-like basis, excluding new store openings, was 6.9%.
Other than at Phase Eight, its strongest category was clothing, where same-store sales jumped 9%, followed by cellphones, up 8.7%. The weakest categories were homewares, where same-store sales growth was a negative 2.9%, and jewellery at a negative 0.5%. In cosmetics, same-store growth was up 5.2%.
The group grew cash sales 20.8% last month and credit sales 7%. Total group sales in the nine months to 26 December rose 33% compared with the same period in 2014, or 11.6%, excluding Phase Eight.
On a same-store basis, sales were 5.8% higher.

The trends for the nine-month period were a little different from Christmas, as clothing and cosmetics were the strongest categories, followed by homewares and jewellery. Cash sales rose 17.3% over nine months and credit sales 7%.
In the nine-month period, merchandise inflation, excluding Phase Eight, was 7.5% on average, Murray said.
“Higher cash than credit sales growth continues to support our view that, although the credit market may be marginally improving, cash sales still have more legs,” Momentum SP Reid analyst Alex Sprules said.
Murray said sales had continued to be good, with same-store growth, excluding Phase Eight, rising 6.2% in the two weeks to 9 January. 

 

Superdrug’s Christmas sales helped by easy gifting options

Superdrug recorded a strong trading performance over the key festive trading period, from the beginning of December to 2 January. Sales in like-for-like stores increased by 6.8%
For the health and beauty chain, owned by A.S Watson Group, the online side of the business is proving fruitful with sales jumping 47% over the five weeks when compared to 2014. Superdrug’s Online Doctor service, dispensing products direct to customers’ doors or nearby stores, has continued to grow it customer base and delivered its first £1m sales period in December.
Make-up was one of the most successful categories in the Christmas season; sales of the brightest and deep red berry shades of lipstick were best sellers. Meanwhile the mild weather which has been affecting apparel retailers across Europe resulted in an increase of bronzing product sales, up 20% as “partygoers eschewed tights for bare legs”.
Fragrance also performed well, rising 12% which was helped by the free ‘Oscar’ teddy bear incentive for customers who spent £30 or more. Fragrance sales were driven by designer brands such as Marc Jacobs, Stella McCartney and Dolce & Gabbana.
In addition, gift ranges had a record Christmas at the retailer, growing 12% compared to the previous year.
Superdrug’s Health & Beauty card loyalty programme continued to attract more customers, now with over 7m registered members, an increase of 2m from last Christmas.
The last quarter saw four new stores open, the most recent at Edinburgh Airport. This is the first airside pharmacy for Superdrug. 20 additional Superdrug stores will open in 2016.
“This Christmas we concentrated on offering customers as many reasons as possible to shop at Superdrug – from market-leading prices to a wealth of free gifts,” said Superdrug MD Peter Macnab.
“We also added interest to our stores with new beauty services, including Braid Bars offering hair plaiting and Glitter Lips,” he added. 

 

Rooftop park coming to Dubai Canal

More than 900 hotel rooms and 5,000 residential units to be built on the two banks of canal
Dubai: During his inspection of the Dubai Canal project on Saturday, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, was briefed by Saeed Humaid Al Tayer, Chairman of Meydan Group, about property and urban development projects to be built on the two banks of the canal.

These projects will be built on an area of 4.68 million square metres with 605,000 square metres earmarked for commercial purposes. They include 5,345 residential units and 948 hotel rooms.
The Gate Towers bridge at the entrance of the canal will comprise a three-level mall built above the canal covering 300,000 square metres. It will feature 434 retail outlets and restaurants. The roof of the mall has been designed as a green park providing an optical connection between its greenery and that of Al Safa Park. The Gate Towers project will include a five-star hotel, hotel apartments and branded apartments.Mall with rooftop park coming to Dubai Canal
More than 900 hotel rooms and 5,000 residential units to be built on the two banks of canal
Dubai: During his inspection of the Dubai Canal project on Saturday, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, was briefed by Saeed Humaid Al Tayer, Chairman of Meydan Group, about property and urban development projects to be built on the two banks of the canal.

These projects will be built on an area of 4.68 million square metres with 605,000 square metres earmarked for commercial purposes. They include 5,345 residential units and 948 hotel rooms.
The Gate Towers bridge at the entrance of the canal will comprise a three-level mall built above the canal covering 300,000 square metres. It will feature 434 retail outlets and restaurants. The roof of the mall has been designed as a green park providing an optical connection between its greenery and that of Al Safa Park. The Gate Towers project will include a five-star hotel, hotel apartments and branded apartments.
Also part of the project are four residential towers linked to Al Safa Park, around 500 retail outlets and restaurants and 1,141 residential units.
Around 200 outlets and restaurants and 211 residential units will be constructed on both sides of the canal.
The canal project will peak at the delta where a peninsula will be formed, adding more than a kilometre to the new beach of the Jumeirah Beach Park.
This expansion will create space for deluxe property development projects in the Marina area featuring more than 60 marinas, 1,817 residential units, 957 five-star hotel rooms, 347 retail outlets and restaurants. 

 

Asda warns of more retail turmoil

The boss of Asda has warned that Britain’s struggling supermarkets will face further challenges in 2016 as it fires the first salvo of the year in the industry’s savage price wars.
Andy Clarke has said he is pumping a further £500m into slashing prices at the grocer as it faces another brutal year of intense pressure.
“There is currently no growth in the food market and the rise of the discounters means that we must take radical action to win back our customers,” said the chief executive.
Asda said last year it had reached its “nadir” after posting worst-ever quarterly sales decline in what Mr Clarke called “the worst storm in retail history”.
The supermarket is expected to report its sixth quarter of falling revenue next month, although the slump in sales is forecast to have slowed from 4.5pc to around 3.5pc, according to analysts.
Mr Clarke’s latest warning comes as the industry reels from the toughest Christmas trading spell since 2008. Next, Marks & Spencer, Waitrose and Sports Direct have all revealed grim sales figures and the City is braced for another flurry of bad news next week.
Wm Morrison is forecast to post a 2pc slide, though that would be a slight improvement on the 2.6pc fall in the previous quarter, while Tesco is on course to post a 2.5pc drop in like-for-like sales.  
Asda’s latest investment comes on top of the £1bn of price cuts over five years first announced in 2013. Mr Clarke said that £600m had already been spent in rolling back prices, taking the total of reductions to £1.5bn by 2018.
“We continue to have the lowest price basket across the big four supermarkets,” said Mr Clarke. The grocery boss said that his objective was to lower the cost of Asda’s baskets to just 5pc more than budget rivals Lidl and Aldi.
Last year Asda launched its “Project Renewal” to trim the number of products on its shelves in order to reduce its cost base. It sells up to 30,000 items in its stores, compared to Lidl and Aldi, which have up to 2,500.
“Our direction of travel is to continue to widen the gap between the other grocers and narrow the gap with the discounters.”
Mr Clarke revealed that the supermarket had also joined Europe’s largest grocery alliance, which combines £178bn of buying power to lower the cost of goods for private label products. Swiss-based EMD includes 14 European supermarkets such as France’s Groupe Casino and Germany’s Markant Deutschland.
Mr Clarke said that the alliance would help it lower costs and improve the
quality of its premium Extra Special range
During the festive season Asda sold 56m mince pies which, if lined up, would stretch from the UK to Greenland. The second-largest supermarket was also buoyed by the Christmas jumper trend, selling 160pc more novelty knits than the year before.
“We continue to be a strong, financially sound business, but the short- term volatility in sales is set to continue this year,” Mr Clarke said. “We are playing a long game.”
Despite falling revenues, the Wal-Mart owned grocer posted a 2.3pc rise in post-tax profits to £708m last year.
“Sales will be under pressure for all retailers this year, the difference is our profitability is robust and that’s not something that others can be confident about,” he added.
Mr Clarke said he would “watch with interest” whether rival Sainsbury’s pursues its Home Retail Group takeover attempt and said that it had been “interesting to read the analyst notes so far”.
Sainsbury’s is expected to be crowned the winner of the major supermarkets with analysts forecasting a 0.7pc dip in like-for like sales in its festive trading update. 

 

UK fashion retail sales fall in “worst Christmas since 2008”

Reduced discounting deterred shoppers from spending in December 

Reduced discounting deterred shoppers from spending in December
Sales at UK fashion retailers continued to decline in December as canny shoppers and unusually warm weather saw high street stores suffer their worst Christmas since 2008. 
Like-for-like sales at fashion retailers fell 5.4% year-on-year during the four weeks 27 December, compared to a 3.1% decline in the same month a year prior, according to BDO’s monthly High Street Sales Tracker. 
The business advisory firm said fashion chains had the most disappointing performance of all sectors, with all four weeks of the month in negative territory. 
Sales of winter fashion lines were dented, BDO said, while a combination of record-breaking rainfall and reduced discounting also deterred shoppers from venturing out in the weeks leading up to Christmas. 
Overall like-for-like sales (excluding non-store sales) declined 5.3% the worst monthly results since December 2008. 
Non-store sales were up just 7.5% – representing the lowest figure recorded since BDO started tracking the sales medium. 
“Many retailers had held out for a last minute sales Christmas rush that never arrived,” said Sophie Michael, head of retail and wholesale at BDO. 
“People have been much savvier about bargain hunting this year. After Black Friday, many shoppers seem to have sat tight and waited for the sales to start on 25 December.”
However, she added that there are early indications activity has strengthened this month, so retailers will be hoping to claw back some ground in the traditional January sales period. 

 

Jack Wills strengthens senior management team

Jack Wills has announced a number of senior management appointments to strengthen its team in key areas as it plans its next stage of growth.
The company has poached Phil Mickler, former CFO at Whistles, for the same position – he will join Jack Wills this month, is “an experienced financial leader in the retail industry”, and has spent more than six years at Whistles. Before that he was Finance Director at Diesel and Finance Controller at Topshop. 
The preppy fashion chain has also hired Mark Wright as Managing Director of eCommerce, to bolster the company’s online presence. Wright, who joined Jack Wills last year, was previously Head of Trading for UK eCommerce at Marks & Spencer. 
In addition, Sophie Neary has been selected for the role of Chief Customer Officer. Neary had previously been working at Jack Wills on an interim basis. She has a consultancy background and formerly advised clients including Tesco and Asda on their customer relations. Her role will be to strengthen the brand’s relationship with its devoted customers around the world.  
Finally, the British retailer has appointed Tim Allinson as Global Supply Chain Director. Allinson is the ex-UK Logistics Director at Dixons Stores Group and will work through the company to ensure the right fashions reach Jack Wills’ customers smoothly and quickly, either through the retailer’s global store estate or its e-commerce operations.
These appointments follow the decision by Pete Williams, Jack Wills’ founder, to return as the Group’s CEO, after a two-year sabbatical. Mickler’s hire follows Ian Johnson’s departure. 
Johnstone joined Jack Wills in August 2014 as Chief Financial Officer and worked closely with the board and its CEO (initially Wendy Becker and more recently Pete Williams). 
Following the Group’s decision not to proceed with a public listing in the foreseeable future, Johnstone decided to resign and to seek other opportunities.  In addition, Emma Sheller, Chief Marketing Officer, and Sanjay Sharma, Global Business Development Director, have also left.
CEO Williams commented: “I am delighted that Jack Wills has attracted such a high calibre new team as we prepare for further expansion in 2016. Phil, Mark, Sophie and Tim are highly experienced retail professionals with vital skills and they will provide the backbone for the group as it continues to grow.” 

 

Ireland Retail Sales Rise In November

DUBLIN (Alliance News) – Ireland’s retail sales increased in November after falling in the …

Alliance News6 January, 2016 | 11:18AM Email Form  

DUBLIN (Alliance News) – Ireland’s retail sales increased in November after falling in the previous month, preliminary figures from the Central Statistics Office showed Wednesday.

Retail sales volume rose a seasonally adjusted 2.2% month-over-month in November, reversing a 0.7% decrease in October. In September, sales showed no variations.

On an annual basis, retail sales growth quickened to 9.3% in November from 6.9% in the preceding month.

Excluding motor trades, retail sales volume grew 2.8% over the month and surged 8.9% from November 2014.

Similarly, retail sales value climbed 1.6% monthly in November, in contrast to a 0.9% fall in the prior month. It was the first spike in four months. The annual sales growth accelerated to 5.6% from 3.6%. 

 

John Lewis Christmas trade driven by online shoppers

Sales at John Lewis grew 5.1% over “three distinct sales peaks” of the Christmas trading period.
Black Friday, Christmas and Clearance characterised a significant shift in patterns of trade, the British retailer said, with higher sales and a different channel mix for each peak. 
While footfall was lower in the run up to Christmas, this was tempered by online sales which grew 21.4% compared to the previous year. Mobile continued to be the fastest-growing channel with sales from smartphones and tablets up 31%. Sales through click-and-collect were up 16% and it was the delivery method of choice for half of all online orders. 
At Waitrose, sales excluding fuel were up 1.2% to £859.8m, with like-for-like sales down 1.4%. There was strong online trading growth as grocery sales rose 7.9%, with sales over the Christmas and New Year weeks up 9.8%. Revenue through direct services websites – including wines, hampers, flowers and kitchen gadgets – grew by 28.1%
Peak trade came particularly late this year and was more concentrated than usual in the days before Christmas. Waitrose had record trading days on 23 and 24 December, with sales up 6.0% and up 5.5%.
Total sales at the John Lewis Partnership in the six weeks to Saturday 2 January were up 4.1% from the same period last year to £1,811.1m
 “This has been a strong Christmas trading period for the Partnership despite the non-food market seeing significant shifts in trade patterns and the grocery market continuing to be challenging,” commented Sir Charlie Mayfield, Chairman of the John Lewis Partnership.
“John Lewis achieved another very strong sales performance with impressive growth across all three categories of Fashion, Home and Technology.  Waitrose had record trading days leading up to Christmas and good growth online, while like-for-like sales declined overall during the six-week period.
Click-and-collect continued to show the strength of our two brands working together as a proposition for customers, with 35% of John Lewis online orders collected from Waitrose branches. I was particularly pleased to see overall customer numbers increase 5.8% against the same period last year.
Our performance reflects to a large extent the significant investment we have made in our distribution and IT capability. Despite the fact trade was even more concentrated across a number of very busy shopping days, our operations performed especially well.” 

 

Will Steve Rowe be able to turnaround Marks & Spencer?

Marc Bolland, the man who has been running Marks and Spencer for six years, will exit following difficulties in transforming the business. After months of quashing rumours that he would be leaving, he has announced his decision to retire, and will remain CEO until the end of the current financial year on April 2, 
In a trading update on the key festive period the high street giant hailed record trading in the food division, where like-for-like sales grew 5%, but the general merchandise arm of the business let the team down. 
GM has remained Marks & Spencer’s Achilles heel for years so “unseasonable weather”, which the retailer blamed alongside poor visibility of stock and a decision to hold back on discounting, can’t hide a 5.8% drop in like-for-like sales over the Christmas. 
Bolland denied feeling pressure to leave from shareholders in a conference call on Thursday morning, claiming that they recognise the business is a healthy one. Still, it seems Bolland is jumping before he’s pushed.  
There’s no taking away that M&S recorded the best Christmas ever delivered by the food category. Perhaps it’s fitting, then, that after “the most rigorous succession planning,” Bolland will be succeeded by Steve Rowe. 
Rowe has been with the British retailer for over 25 years, and a Board member since 2012. Before joining the Board, he worked in a range of senior positions across the business including Director of Retail and E-commerce and various positions in General Merchandise.  
In 2012 he was appointed by Marc Bolland to the Executive team as Executive Director, Food as well as the board. In particularly difficult market conditions Rowe led the Food business to produce 12 consecutive quarters of like for like growth, grow its margin and all its key performance metrics and “set out a path for further profitable growth”.  
In July 2015, Rowe was appointed Executive Director, General Merchandise with a mandate to improve the overall performance of that business. 
In the 13 weeks to 26 December, the food category delivered 5% growth in like-for-like sales, a testimony to the quality of the product. 
“Marks and Spencer general merchandise sales suffered from poor availability but also from lower demand due to the unseasonably warm weather,” comments James McGregor, a consultant at Retail Remedy. “Something doesn’t quite add up there. Wrong stock, wrong place, wrong time?” 
“Marks and Spencer has secured its own share of the seismic shift to online retail this Christmas”, sales were up by 20.9%, “but it is off a lower base than Next or John Lewis, and is still trying to make up ground lost from its faltering website relaunch. 
As extremely slick as the Marks and Spencer fashion website appears on the surface, when it is dunked by the customer, it comes up as a plain old custard cream,” McGregor added. 
Rowe is a skilled retailer, particularly from an operational/logistics point of view. From a CEO standpoint he’s understandably unproven but the outlook for Rowe driving the business is optimistic. He will, however, need to make some game-changing decisions in order to turnaround the high street stalwart.   

 

Aldi plans record UK store openings in 2016

Aldi will grow faster than ever this year as it continues to expand in line with its two-year £600m investment plan.

80 new stores
Last year, Aldi grew its estate by c.65 stores and plans to exceed this in 2016 by opening 80 new stores across the UK, an increase of 23%. Aldi’s strong expansion plans will take its total UK store count to over 700, demonstrating the continued success of the discounter in the UK, largely down to how its lower price model and winning quality ranges resonate with UK shoppers. As Aldi grows, we expect it to invest further in developing both its private label and branded ranges, creating new opportunities for suppliers.
Expanding in Scotland
Aldi’s UK expansion will see a focus on Scotland where it will open eight new stores this year, growing the estate to 72. The discounter has also announced its strategy to increase the amount of products sourced nationally; expected to grow by 10% over the next 12 months. With this in mind, Richard Holloway, MD of Aldi in Scotland, has revealed that this year the discounter will be looking to ‘grow relationships with existing suppliers and cultivate new ones too’, creating opportunities for local Scottish suppliers.
January Challenge
Aldi’s annual New Year challenge, #AldiChallenge, has made a comeback on its website, encouraging visitors to ‘save money, eat fresh and live well’. The website invites Aldi shoppers to share savings, skills and stories across its social media platforms in a move which is sure to spark conversation around saving in the new year, especially Special Buys. The challenge initiative is a tool that enables Aldi to hook shoppers from the beginning of the year, particularly with its low prices after an expensive time of year.
2016 launch online
This year Aldi makes its move online in the UK; a key way in which it plans to expand and grow in the UK where the grocery market will be driven by this channel, along with discount and convenience. IGD estimates that by 2020, the online channel will make up 8.6% of the UK grocery market, up £8.3bn to £17.2bn.  

 

Next blames warm weather for ‘disappointing’ sales

 

Retailer Next has blamed the warm weather in the final few weeks of last year for a “disappointing” trading performance in the run-up to Christmas.
The company also said trading at its Next Directory online and catalogue operation had been difficult, due in part to poor stock availability.
Between 26 October and 24 December, sales at its High Street shops fell 0.5%, but rose 2% at the Directory arm.
Next, whose shares closed down 4.6%, lowered its full-year profit estimate.
The company, which has more than 500 stores, says it now expects annual pre-tax profits to be about £817m. This is at the lower end of its previous guidance issued in October, when it predicted profits of between £810m and £845m.
The retailer, which did not take part in some of the heavy discounting sales events at the end of last year, said in a statement: “We believe that the disappointing performance in the fourth quarter was mainly down to the unusually warm weather in November and December.”
The statement also pointed to “mistakes and challenges” faced by the business. “Specifically, we believe that Next Directory’s disappointing sales were compounded by poor stock availability from October onwards.”
In addition, Next said that online retailing was becoming tougher as competition intensified.
Nevertheless, the company said full-price sales for the year-to-date were 3.7% ahead of last year, just below the bottom end of Next’s previous guidance of a 4%-6% rise.
‘Tough market’
Analysts said the figures, the first winter trading update from one of the big retailers, suggested other High Street firms may have struggled.
Neil Saunders, from retail analysts Conlumino, tweeted: “Next’s lacklustre results do not bode well for the rest of the High Street; warm weather was the main source of its woes.”
Maureen Hinton from retail consultancy Verdict told the BBC that the results indicated a “very tough” market.
However, Phil Dorrell, a director at Retail Remedy, told the BBC that the figures were “pretty positive” for Next.
He told BBC 5 live that after other retailers have released their Christmas sales figures, the view could be: “Wow, Next did really well.”
He expects Marks and Spencer to report a decline in sales for the Christmas period when it releases figures on Thursday.
Department store chain John Lewis will reveal how it fared over the festive period on Wednesday. 

 

Next and M&S first victims of retail’s toughest year

The fallout from a punishing winter for Britain’s high street will be laid bare this week when retail stalwarts Marks & Spencer and Next are expected to report tough festive trading.
Retailers have had to battle with a potent mix of unseasonably mild temperatures; heavy rainstorms; Black Friday discounting; and the terrorist attacks in Paris. All have been blamed for dampening shoppers’ enthusiasm.
Britons left their Christmas shopping until the latest point since records began in 1998, according to Ipsos Retail, with footfall only peaking in the three days leading up to Christmas. Despite the late burst of activity, high street visitors were still 1.8pc lower than the same week last year.
In what has already been called the toughest year ever for retail, because of an intensely competitive landscape, this Christmas is expected to put a wide gulf between the winners and losers.
The City expects Marks & Spencer, which was running heavy promotions in the days leading up to 25 December, to be the usual tale of two halves.
Analysts predict its food arm to have notched up stellar sales, luring shoppers with smoked salmon pearl-shaped mousses, jeroboams of prosecco and melt-in-the-middle puddings. However, its general merchandise division is likely to have suffered again.
Nick Bubb, an independent retail analyst, is forecasting a 3pc drop in like-for-like sales, while Fraser Ramzen at Nomura is predicting an even steeper 5.5pc, which would be almost as disastrous as last year’s 5.8pc plunge, when problems at its distribution centre meant it had to suspend deliveries.
While M&S has been offsetting disappointments in sales rises with a tighter grip on profit margins, these could have come under pressure as it tried to clear stock of its winter suede coats and cashmere jumpers.
M&S is also thought to share some of the same middle-aged customers as Bonmarche, which was forced to issue a profits warning before Christmas.
Marks & Spencer’s 2015 Christmas advert
Next, which, unlike its rival, refuses to discount until Boxing Day, is expected to have enjoyed robust trading.
Clive Black of Shore Capital said: “Next always defies gravity when it comes to outperforming the rest. It understands its customers, holds firm when it comes to not discounting and then shoots the lights out for the sale.”
Next warning of ‘cooling demand’ hits retail shares Next expects shopper to become increasingly cautious this year
However, analysts at Jefferies cut their fourth quarter sales forecasts for Next to 4pc, down from last year, when they forecast 7.6pc growth. Next had lifted profit guidance by £5m for the full year before the festive season.
John Lewis is also due to update on Christmas trading on Wednesday. Its most recent weekly sales report for the period to Boxing Day shows that more shoppers than ever chose to escape the crowds and shop online, boosting total sales by 2.3pc. However, its stores experienced sluggish trading