Footfall slumps in December
UK retail footfall slumped in the final month of the year, with rainy weather keeping shoppers away from the high street, numbers on Friday showed.
According to the latest British Retail Consortium-Sensormatic IQ data, footfall in UK retail destinations declined 5.0% on-year in December, worsening from a 0.7% fall in November.
"December's heavy rain left many shoppers reluctant to brave the elements, who instead opted to browse online before making final purchases, or shop online altogether. This led to a substantial decline in footfall levels compared to December 2022, when there was significant pent-up demand for in-store shopping post Covid-restrictions," BRC Chief Executive Helen Dickinson said.
Next impresses
Next PLC (LSE:NXT) (Next PLC (LSE:NXT)) increased profit guidance on Thursday after revealing sales during November and December were better than anticipated.
Kicking off the Christmas trading statement season, the Leicester-based retailer said in the nine weeks to 30 December 2023, full-price sales were up 5.7% compared to the year before, £38 million above previous guidance.
It is the fifth consecutive increase by the FTSE 100-listed firm, which last lifted expectations in November.
As a result, Next has raised full-year pre-tax profit guidance by £20 million to £905 million, up 4.0% versus last year, with full-price sales expected to reach £4.78 billion.
The strong performance led to analysts at Deutsche Bank upgrading its share price target, while those at Shore Capital cheered its ability to navigate a ‘benign’ consumer market.
JD Sports in trouble
High-street chain JD Sports Fashion PLC (LSE:JD.) (JD Sports Fashion PLC (LSE:JD.)) undershot its revenue target with 6% organic growth in the 22 weeks to 30 December 2023.
In a trading update, the group conceded that milder weather and a softer peak trading session, reflecting “cautious consumer spending”, impacted the top line.
Gross margins aligned with the prior year, but this also fell short of expectations.
Analysts such as those at Shore Capital placed the stock’s rating under review while they delved into what’s gone wrong.
However, Peel Hunt, the group’s house broker, issued a research note of solidarity, stating that the current dip represents “a good opportunity to buy a high-quality, growing market leader”.
It claimed that the weaker financials over Christmas were largely caused by external factors, such as a lack of exciting launches, cautious shoppers looking for deals and milder weather slowing the sales of winter range products such as coats.
Aldi and Lidl report on Christmas
Beginning the week, Aldi and Lidl unveiled record trading in the UK over the Christmas period as higher prices drove consumers to discounters.
Aldi reported sales above £1.5 billion for the first time in the month to Christmas Eve, while Lidl said it had had its best holiday period yet since moving into the UK in the early 1990s.
For Aldi, this marked an 8% year-on-year rise in sales, while Lidl pointed to its Deluxe range as aiding a 12% jump.
However, experts at Shore Capital weren’t all that convinced and claimed that management would likely be disappointed with the performance as it represents around a 2% to 3% fall in like-for-like (LFL) volume growth.
Shore Capital said that the decrease occurs when considering a 4% to 5% contribution from new space and inflationary increases of around 5%.
“If Aldi did deliver LFL volume growth then its new stores would appear to be sagging, which we doubt,” analysts at the broker added.