Retail sales surprise

By: Leonie Barrie - 7 January 2009 15:27

Results from UK clothing retailers Debenhams, Next and New Look yesterday took the market by surprise – but this time because they were better than had been expected instead of worse than feared.

Trading could even be described as relatively robust, as Debenhams bettered last year's festive performance with a 3.3% drop in like-for-like sales over the last 12 weeks. And despite posting a 7% slump in like-for-like sales in the run-up to Christmas, Next managed to increase sales at its Directory business by 1.1%. New Look, meanwhile, positively bloomed with a 2.8% rise in like-for-likes and a whopping 14.5% hike in total group sales.

Crucially, department store operator Debenhams claims it has continued to take market share from rival retailers, and that its profits were up on last year. Next, too, said its full year profit remains on target.

But while Debenhams staged a series of three-day and five-day promotions to drum up sales, both Next and New Look managed to hold out and trade at full price right up to Christmas. New Look said it has also benefited from “staying focused on fashion our customers want at prices they can afford.”

The worry now is that Debenhams and other retailers who have succumbed to heavy discounting will have to stick with this policy to stimulate sales. It won’t be long before shoppers wise up to the fact that if they hold out for long enough they won’t have to pay full price. And for the likes of Next and New Look this is surely good news.