Wednesday is billing up to be another big day for the retail sector, with Burberry Group PLC (LSE:BRBY), WH Smith PLC (LSE:SMWH) and Currys PLC (LSE:CURY) all updating the market.
A raft of retailers, including Sainsbury’s, JD Sports and Next have all already spilled the beans on their festive trading, with the general trend being that things were not too bad at all for the big guns.
Currys will be hoping to follow the trend set, given consensus among City analysts was that a quiet Christmas could spell trouble.
Analysts at Hargreaves Lansdown said the cost-of-living crisis, coupled with Currys' more expensive products could result in them not featuring as much under Christmas trees.
Analyst Matt Britzman noted that the short product cycles of tech products also presented a problem heading into the end of the year.
“If cash-strapped consumers decide not to upgrade their model this Christmas, Currys will be left with a surplus,” which will result in heavy discounting, applying pressure to margins.
Wednesday’s update should therefore not only give investors an idea of Christmas trading but also what type of discounting, if any, will be applied going forward.
Moving more upmarket into the fashion subsector, Burberry reported in November that revenues jumped 5% thanks to an increase in tourism following the easing of Covid restrictions.
Heathrow passenger figures suggest London and other Western tourist destinations saw a busy January, something Burberry and its investors will hope would have worked in the group’s favour, coupled of course with a Christmas splurge.
It’s a similar situation for travel-focused retailer WH Smith, which has most of its best stores in airports and swung to a profit last year with the claim it was in its “strongest ever position as a global travel retailer.”
Easing of restrictions facilitated greater movement at airports and train stations, where WH Smith stores feature heavily.
“We have started the year well and, while there is economic uncertainty, travel patterns globally continue to improve and this, combined with the strength of the group's growth opportunities, means that we are well positioned for a year of significant progress in 2023,” chief executive Carl Cowling said in the last update.