January is an important time for retailers as the first opportunity to inform the market of the Christmas trading period.
This year was no different, with 17 London-listed players providing updates.
The emerging theme was one of a better-than-expected Christmas, but that 2023 was still clouded in uncertainty against the macroeconomic backdrop.
As the month draws to a close, here’s a rundown on the good, and the not-so-good, retailers who have reported so far this month.
Good
Next
Next PLC (LSE:NXT) got the sector kicked off at the start of the month and delivered good news, with full-price sales in the nine weeks to 30 December up 4.8% compared to the same period a year earlier.
This was around £66mln better than previous guidance when the group had anticipated a 2% fall.
As a result, the FTSE-100 listed group upped its full-year pre-tax profit guidance by £20mln to £860mln.
Next, in typical fashion, downplayed the outlook for the 23/24 financial year, with full-price sales forecasted to fall 1.5%, taking pre-tax profits down 7.6% to £795mln.
B&M
B&M was another Christmas success story, with revenues in the three months to 24 December growing 12.3% year-on-year to £1.56bn.
The discount retailer, which also owns Heron Foods, said that consistent with its capital allocation framework, it intends to declare a special dividend of 20p to be paid to shareholders on 3 February, although this is less than the 25p paid last year.
Additionally, the group narrowed in on its adjusted underlying earnings (EBIDTA), which is now expected to be between £560mln and £580mln for the year, ahead of analyst forecasts of £557mln.
Greggs
Greggs rolled in and shrugged off the impact of adverse weather and rail strikes towards the end of last year with like-for-like sales climbing 17.8% compared to the same period in 2021.
The sausage roll and steak bake specialists said that thanks to strong trading, and careful cost control, it will report a full-year outcome in line with its previous expectations when it releases results in March.
Sainsbury’s
Onto one of the grocers, and Sainsbury’s expects full-year profits at the upper end of guidance thanks to a bumper Christmas.
Sales in the six weeks to 7 January rose 7.1% compared to a year earlier, with pre-tax profits for the year ended March to be closer to £690mln.
For grocers, cost inflation continues to weigh on margins, although Sainsbury’s seems willing to take the hit.
Chief executive Simon Roberts said: “We are working together with our suppliers to battle cost inflation and we’re keeping prices low again this year.”
Marks and Spencer
Marks and Spencer said it delivered strong sales over Christmas, defying expectations that the ‘luxury’ grocer would struggle.
As total sales grew by 9.7% to almost £3.3bn in the 13 weeks ended 31 December 2022, underlying revenues were up 7.2%.
Eye-catching was the performance of clothing and home, which posted like-for-like sales growth of 8.6%, while food was up 6.3% on a same-store basis.
To dampen the mood somewhat, however, chief executive Stuart Machin resisted the urge to raise profit forecasts, pointing to cost pressures on the bottom line.
JD Sports
JD Sports Fashion said it expects its full-year pre-tax profits to come in at the top end of market expectations after reporting an uptick in sales over Christmas.
Profit before tax for the year ended 28 January 2023 is now expected to be at the higher end of market consensus, which was between £933mln and £985mln.
Sales in the six weeks to 31 December 2022 grew by 20%, compared to 10% in the 22 weeks to the end of the previous year and 5% in the first half of 2022.
Tesco
The UK’s largest grocer, Tesco, held its full-year profit guidance on the back of a strong Christmas period.
Sales jumped 7.2% in the six weeks to 7 January, and Tesco boasted of being the only full-line grocer to increase its market share from before the pandemic.
However, while analysts at Shore Capital maintained that the update was ‘sound’, it remained cautious over the macroeconomic outlook.
“Until inflation eases so that household finances have the prospect of improvement and so consumer confidence increases, we are also nervous about aggregate demand and so the robustness of our financial estimates for financial year 24 in particular,” the broker said.
Currys
Electronic and domestic goods retailer Currys said a stronger-than-expected performance in the 10 weeks to 7 January offset its international sales.
Revenue in the UK and Ireland was 5% lower than in the same period a year earlier, but profits were better than forecasted which reflected gross margin increases and continued cost savings.
Currys was able to hold its full-year pre-tax profit guidance, as a result, and this is expected to be somewhere between £100mln and £125mln.
WH Smith
WH Smith flew higher over Christmas thanks to a recovering travel sector, with much of its portfolio dotted in airports and train stations.
Total group revenue for the retailer was up 41% in the 20 weeks to 14 January, and 20% higher than pre-pandemic levels.
Chief executive Carl Cowling was bullish on the outlook, expressing his confidence about “another year of significant growth ahead.”
Dunelm
Home accessories and furnishings retailer Dunelm said sales in the quarter were 18% higher than the same period a year earlier, and up 48% on the pre-pandemic period.
In particular, the group’s Autumn and Winter ranges proved popular, as customers sought imaginative ways to stay warm without turning on the heating.
Full-year pre-tax profits, it said, will be above current market expectations, with Dunelm’s range between £131mln and £186mln.
This is despite margins expected to fall in the second half due to two sale events.
ABF
Primark owner Associated British Foods reported a 20% jump in revenue in the 16 weeks to 7 January 2023.
In particular, the FTSE-100 company said its retail arm had a strong Christmas trading period as footfall recovered in the UK and Eurozone.
Sales at Primark contributed to nearly half the total income in the period, £3.14bn compared to £6.69bn for the total company.
Consumer spending remained resilient over Christmas while inflation is becoming less volatile and commodity costs are beginning to decline.
Bad
Games Workshop
Games Workshops half-year report issued this month did little to ease the Christmas blues.
The manufacturer of miniature wargames said in the 26 weeks to 27 November pre-tax profits fell to £83.6mln from £88.5mln, largely due to a slump in licensing revenue, which fell to £14.3mln from £20.1mln.
ASOS
New year, but the same ASOS. Despite boasting it had delivered “significant progress” in its turnaround plan, the online fast fashion retailer reported a slip in revenues in the four months to 31 December.
Total group revenue was down 3% in the four months to 31 December 2022, in line with expectations, although UK sales were down 8% and were particularly low in September and in December, which was impacted by delivery problems following Royal Mail strikes.
Burberry
High-end fashion brand Burberry missed sales expectations in the three months to 31 December, with China’s lockdown weighing on performance.
Comparable store sales were up 1%, falling slightly below the market consensus of 1.4% growth, although excluding China sales were up 11%.
It was a similar story for revenue, which grew 5% to £756mln, compared to City forecasts of £777mln.
TheWorks
Arts and crafts retailer TheWorks said first-half losses to the 30 October deepened, reporting a pre-tax loss of £10.7mln compared to £1mln a year earlier.
It moved to ease investors, however, adding that much of its profit generation is weighted to the second half.
In the 11 weeks to 15 January, like-for-like sales grew by 5.7% compared to a year earlier, with the retailer adding store sales remained strong over Christmas, albeit this offset a decline in online sales, which fell 14%.
Dr Martens
Shares in bootmaker Dr Martens took a kicking after it issued a profit warning, cutting back on earnings estimates for the full year.
The iconic shoe brand blamed a bottleneck at its recently opened Los Angeles distribution centre and weaker-than-anticipated US trading.
It expects the bottleneck to reduce wholesale revenue by £15mln-£25mln and underlying earnings (EBITDA) by £16mln-£25mln, including £8mln-£11mln of supply chain costs.
Boohoo
Like its pure online competitor, ASOS, boohoo is trying to transform the business while dealing with falling revenues.
Sales in the four months to 31 December, slipped 11%, although the outlook for the year was somewhat positive.
Boohoo said it expects lower freight costs and inflation to moderate throughout 2023, providing an improved outlook for the year.