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The High Street – Still Alive And Kicking But Online Threat Grows

Marks & Spencer MKS gives a very brief summary of its trading for the 13 weeks to the 31st December. Group sales rose by 5.9% on a reported basis. Food did well with a rise of 5.6% or 0.6% on a like for like basis and  continuing to increase its market share. Sales in clothing and home did even better on a like for like basis with a rise of 2.3%. Total like for like sales were up by 1.3%. The high street may still be a battleground but at least Marks emerged unscathed from the most important trading period of the year.

Tesco TSCO claims its first increase in market share since 2011 following strong and sustained progress in its 3rd quarter, covering the 13 weeks to the 26th November, which also produced the 8th consecutive quarter of volume growth. Over the 6 weeks to the 7th January the rise in like for like sales continued with growth of 0.3%, the UK being particularly strong with a rise of 0.7%. Clothes and toys produced over all sales rises of 4.3% and 8.5% respectively. The one weak point was International which produced like for like falls in both the 3rd quarter and  over the 6 week Xmas period.

Mothercare MTC showed a return to growth in the UK for the 13 weeks to 7th January with a 1% rise in like for like sales but International sales still has problems with a total fall of 6% in constant currency terms, the day being saved by currency fluctuations which turned that into a rise of 13% in real terms. Online growth was particularly strong with a rise of 5.5% taking online’s percentage of total sales up to some 40% of total sales. Perhaps this is an indication of the future of retailing.

Debenhams DEB Is pleased with what it claims to be a resilient performance, with like for like sales over the 18 weeks to 7th January up by 3.5% or 0.5% on a constant currency basis. Online sales were strong with a rise of 13,9% taking online’s growth over 2 years to more than 25%. The 7 week Xmas period to 7th January produced like for like growth of 5% or 1.7% on a constant currency basis.

ASOS ASC provides more evidence of the growing power of online retailing with growth which dwarfs that of the high street retailers. Total group revenue rose by 30% on a constant currency basis for the 4 months to the end of December. The UK looked positively pedestrian against this with a rise of only 18%, which ASOS nonetheless claims is a strong performance in a more promotional market.

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Mothercare Breaks Excuses Record As Worldwide Sales Slump

Mothercare MTC refuses to admit that its full year underlying profits will be below expectations, preferring instead to claim that they will be “within range” of market expectations, not you will note, within “the” range of those expectations.  It also uses virtually every excuse available to modern management on how to avoid blame for its own shortcomings and shift it onto external causes.

Like for like UK sales did rise by 2.1% and online sales, which now account for 35% of those, did even better with a rise of 5.5% but in the end the figure which counts is that total UK sales for the year were up by only 0.8%.

It is on the international retail battlefield where Mothercare failed miserably   Worldwide sales fell by 4.5% due not to the failings of management but to external causes for which management has no responsibility whatsoever.

International — ongoing economic and currency headwinds – — so sterling collapses and it is a disaster, just like it was when sterling was continually on the rise.

Middle East – lower oil prices

Asia – weakening consumer confidence

Europe & Latin America – again its those nasty adverse currency movements.

What Mothercare is really saying, without openly wanting to admit as much, is that its management failed to meet a single challenge presented by world markets. And they are all still in situ it appears, at least so far.

Debenham DEB is losing its CEO who has handed in his resignation today as the group announced a record Christmas and a 2.5% rise in the interim dividend. Profit before tax for the 26 weeks to the 27th February was up by 5.5% and basic earnings per share by 5.1%, the result of what the company describes as a strong operating performance. Internationally the picture was not as good with international EBITDA down by 5.8% due to ( go on, have a guess)  – adverse currency movements.  full year results are expected to be in line.

Lite Bulb Group LBB looks as if it is about to disappear from AIM following the resignation with immediate effect of finnCap Ltd. as its nominated advisor and broker. LBB says it is highly unlikely that it will appoint another NOMAD so in a months time it will automatically and unceremoniously be thrown off AIM.  Should we keep our eyes on the woodwork and see what then comes crawling out.

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Is Tesco The Xmas Winner ?

Tesco (TSCO) enjoyed a strong Xmas and perhaps surprised many of the pundits, not to to say the opposition, with all round growth as sales rose both at home and abroad. Like for like group sales for the 6 weeks to 9th January rose by 2.1%, even UK like for like sales were up 1.3% and international led the way with a rise of 4.1%.

Home Retail Group HOME admits to a mixed performance over the 18 weeks to the 2nd January but Argos sales rose 0.9% despite reduced store footfall on the high street.  Homebase like for like sales were up by 5% but that figure is rather meaningless because total sales fell by 4% as a result of the aggressive store closure plan.

Profit before tax for the year to the end of February is expected to be at the bottom end of market expectations.

Mothercare MTC had a fairly disastrous third quarter on the international front, reflecting economic and currency headwinds for which management is in no way to blame. International sales were down 9.5% in actual currency, over the 13 weeks to the 9th January, whilst UK like for like sales rose by 4.2% following weeding out of weaker stores. UK online won the day with a rise of 11%.

Group worldwide sales fell by 5.5%, double the fall in the previous quarter. Mothercare was another store to get its weather forecasting wrong, so blames the unseasonably wamr weather for having a lot of unsold stock left over for the sales.

Associated Brtish Foods ABF saw Primark sales up by 7% over 16 weeks to 2nd January and group revenue up by 3%.

So in the end it looks like the surprise winner will have been Tesco.  It remains to be seen if Tesco can now start regaining market share and clamber its way back up to being number one.

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