Blog: Leonie BarrieNew Year, bad news

Leonie Barrie | 5 January 2009

We’re less than a week into the New Year and already there’s another slew of bad news from the high street – confirming fears that disastrous holiday sales will spark a domino effect of store closures and bankruptcy filings over the next couple of months.

Maternity wear retailer Blooming Marvellous was this weekend reported to be on the verge of collapse, and Adams Childrenswear today shut 111 stores with the loss of around 850 jobs, just five days after calling in the administrators.

The next fortnight will also see trading updates from the likes of Marks & Spencer, Next, Debenhams, Ted Baker and JD Sports, and there are fears that the recent stampede of shoppers taking advantage of unprecedented discounts still won’t have boosted sales enough to help margins. After all, the logic says, if you cut prices in half then you’ll have to sell twice as much to make up the difference. And with the best will in the world, that’s unlikely to have happened.

M&S, which reports results on Wednesday, is widely expected to announce one of its worst ever Christmas trading performances accompanied by another profit warning. The retailer is one of the UK high street barometers, so its performance will be keenly watched. It was also one of the most high profile discounters over the festive season with several one-day sales in which it cut prices on all clothing items by 20% in an effort to stimulate flagging sales.

But industry observers believe the move is unlikely to have had the desired effect – and are expecting an 8.5% drop in sales of general merchandise (which includes clothing and footwear) in the 13 weeks to 27 December.

 


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