Three of the UK's biggest retailers had grim news
on Christmas trading today with Morrisons, the supermarket chain, issuing
an unscheduled profit warning while Tesco and Marks & Spencer posted
worse-than-expected sales in what has turned out to be a Black Thursday.
Meanwhile, Aldi and Lidl, the German retailers, celebrated a bumper Christmas in
Morrisons said full-year underlying profit would
be below market expectations of £812m and is now expected to be about £783m.
It said the "Christmas
period has been very challenging with a slowdown in market growth. Hard pressed
consumers elected to economise and managed their budgets very tightly, buying
less and shopping selectively across a range of formats and retailers. In the 6
weeks to 5 January 2014 total sales excluding fuel were down by 1.9% (3.3%
including fuel). Like- for-like sales* declined by 5.6% (7.1% including fuel)."
The retailer added that
the difficult market conditions were intensified for Morrisons by the
accelerating importance of the online and convenience channels, where Morrisons
is currently under-represented, and by targeted couponing which was particularly
prevalent in the market this Christmas. "Although the strength of our unique
supply chain and the commitment of our colleagues enabled us to maintain high
standards of service and strong availability throughout this peak period, our
sales performance was not as strong as we had planned."
Tesco said group sales in the six weeks to
4 January 2014 declined by (1.2)% including petrol ((1.6)% at actual exchange
rates) and declined by (0.6)% excluding petrol ((1.1)% at actual exchange
In the UK, total sales including VAT and petrol
declined by (1.5)% and by (0.6)% excluding petrol, with like-for-like sales
declining by (2.4)%.
The company said the "results were driven
primarily by a weaker grocery market, and also reflect the impact of a tougher
comparative. Our decision to significantly reduce our new store opening
programme and our ongoing work to transform our general merchandise offer are
also holding back top-line performance in the short term, particularly relative
to others in the sector."
Total international sales declined by (0.7)% at
constant exchange rates, excluding petrol – an improvement from the third
quarter, despite continuing external challenges in the majority of our markets.
Foreign exchange rates impacted both of our regions negatively for the six-week
period, resulting in a total sales decline of (2.2)% at actual rates, excluding
Marks & Spencer said today non-food sales
in the three months to 28 December were below its own expectations. Group
like-for-like sales in the eight weeks before Christmas were up 1% but over the
third quarter they fell 0.2%.
Marc Bolland, the chief executive, said
improved performance over Christmas could not make up for falling sales of
clothes and other general merchandise in an unusually warm October.
M&S said given continued pressure on disposable
incomes, "we remain cautious about the outlook. Our focus is on continuing to
transform Marks & Spencer into an international, multi-channel retailer."
Aldi said it had its best
Christmas since opening in Britain in 1990 and Lidl said it had seen its best
performance to date over the festive period.
Lidl said it had its busiest Christmas
since its UK launch in 1994 and in its 600 stores it had a sell-out of fresh
British turkeys on Christmas Eve, while its Comte de Brismand champagne was its
top selling product in value terms.
Aldi, which has
more than 500 UK shops, doubled the size of its Christmas range, increasing
stocks and offering more exclusive products. It said fresh lobster tails, fresh
free-range Roly Poly turkey and luxury mince pies were all hits.
A spokesman said: “2013 has been our most successful year in the history of Lidl
UK and we would hope to see this continue throughout 2014.”
An Aldi spokesman said: “Our
customers know they don’t have to wait for price cuts or promotions to save
Kantar Worldpanel data in
December showed more than half of UK households shopped in Aldi or Lidl in 12
weeks to December 8.
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