just-styles roundup of holiday apparel and footwear industry results

just-style's roundup of holiday apparel and footwear industry results

With the holiday season done and dusted, UK apparel and footwear retailers are counting the cost. In the most recent Christmas trading reports, JD Sports, SuperGroup, Fat Face and Debenhams saw sales rise over the all-important trading period, while Tesco and Matalan recorded a decline in revenue. Sainsbury's posted an increase in clothing sales, Shop Direct delivered "record breaking" results, and Ted Baker enjoyed a "good retail performance". 

Primark 

As a result of warmer and wetter weather across Europe, value fashion retailer Primark has revealed that sales leading up to and over the Christmas period were weaker than the seven weeks prior. During the 16 weeks to 2 January, sales were up 7% year-on-year on a constant currency basis, with total sales rising 3% at actual exchange rates. 

Verdict Retail analyst Kate Ormrod described the performance as "muted", but noted: "Though it faced difficulties selling winter stock, Primark's appeal remains resilient, with its trend-led fashion ranges and keen price points very much competitive on the UK high street and its proposition evidently welcomed in new markets." 

JD Sports 

UK retailer JD Sports has said it expects to beat its full-year profit target after trading in the critical Christmas period remained "very positive". Like-for-like sales in all the core sports fashion fascias, including those in Europe, increased by 10.6% in the five weeks to 2 January. The company now expects headline profit before tax and exceptional items for the current financial year is likely to exceed current consensus market expectations of GBP136m (US$195.5m) by up to 10%. 

Investec analyst Kate Calvert described the results as a "champion's performance", adding: "JD appears to be in a sweet spot as several years of store & infrastructure investment is starting to bear fruit. We believe there is more to come, seeing an exciting European roll-out opportunity and attractive UK growth prospects."

SuperGroup

Superdry brand owner SuperGroup said the positive impact from the group's European store roll-out programme boosted total revenues in the 11 weeks to 9 January, which climbed 14.6% to GBP143.5m (US$206.2m). Like-for-like sales grew 1.2%. The company has maintained its full-year gross margin accretion guidance of between 40bps and 60bps. It is expecting to deliver underlying profit before tax for the full year in line with analyst expectations. In its third-quarter, total sales climbed 23% to GBP315.6m, while like-for-like sales grew 9.5%.

Investec analyst, Kate Calvert, noted: "This update shows how far management has come in de-risking SuperGroup from uncontrollables such as the weather and is starting to build a nice consistent growth record."

Tesco

Clothing sales for UK supermarket group Tesco grew "significantly" ahead of the market over the Christmas trading period, thanks to strong ladies fashion and knitwear ranges and lower prices. This performance was evident in all formats and categories, the retailer said, with group like-for-like sales up 2.1% and UK like-for-like sales up 1.3%. International sales grew 4.1% in the 19 weeks ended 9 January.

For the third quarter, however, group like-for-like sales fell 0.5%, while in the UK sales were down 1.5%, as a result of the retailer putting a stop to its "unsustainable couponing" that had boosted sales in the prior year. International like-for-like sales were up 2.9%.

George Scott, senior consultant at Conlumino, noted: "In the lead up to its more impressive festive trading performance, Tesco's Q3 trading very much reflected its recent negative trend. Nonetheless, these figures were distorted by store closures as well as a cutback on heavy promotions, which were employed so heavily the previous year. Stripping out the impact of these changes, Tesco has shown a marked improvement in putting the customer back at the heart of its proposition, particularly over Christmas, when sales volumes were up 3.5%."

Sainsbury's 

UK supermarket retailer Sainsbury's said its Tu clothing arm saw sales increase nearly 6% during the 15 weeks to 9 January, despite unseasonably warm weather, with general merchandise growing 5% year-on-year. The company said like-for-like sales, excluding fuel, edged down 0.4%, while total retail sales, excluding fuel, climbed 0.8%. 

Conlumino analyst George Scott said the performance was "far worse than expected". But he added: "We still retain a positive view thatSainsbury's brand values around affordable quality will eventually bear fruit, but its sales growth will take time to recover."

Shop Direct 

Online fashion group Shop Direct delivered record breaking Christmas results, with sales up 6% year-on-year. For the seven weeks to 25 December, clothing and footwear sales were up 6% year-on-year despite unusually warm weather, with Very.co.uk like-for-like sales jumping 17%. 

Verdict Retail analyst Kate Ormrod said: "These festive results show that Shop Direct has fully delivered over peak trading and with its focus for 2016 firmly on personalisation and leveraging data to improve customer experience, 2015/16 will be another solid year for Shop Direct."

Ted Baker 

UK fashion retailer Ted Baker said it enjoyed a "good retail performance" over the Christmas period, with sales rising 10.1% year-on-year. E-commerce sales jumped 39.1% during the eight weeks to 9 January, while gross margins were in line with expectations and there was no significant promotional activity before Christmas. 

Conlumino analyst Anusha Couttigane described the results as "enviable", adding: "A winning Christmas will help the company to secure a strong set of full-year results when the year closes on 30 January."

Fat Face 

UK clothing retailer Fat Face delivered a "strong" Christmas trading performance, particularly online as it maintained its full price strategy. Total sales grew 8% for the five weeks to 2 January, with full price like-for-like sales up 3% year-on-year. E-commerce sales jumped 43% to GBP9m (US$13m), with the majority of traffic and sales now coming from mobile devices. The company also recorded record EBITDA of GBP14.3m, up from GBP13.5m a year ago.

Debenhams 

Analysts have expressed mixed views on Debenhams, despite the UK department store retailer posting better than expected Christmas results. During the seven weeks to 9 January, like-for-like sales climbed 1.8% and were up 3.7% in constant currency. Online sales jumped 15.4% year-on-year. Less discounting and a lower level of promotional activity led to full price sales growth of 5%, supported by planned reduction in stock levels across clothing, particularly in weather-sensitive categories. 

"By unlocking the true potential of its online operations and implementing strategic range planning, Debenhams remains on track to deliver profits in line with market expectations in its full year, confirming that discounting both pre and post-Christmas has not eaten into its margins," said Conlumino analyst Rebecca Marks. 

However, Investec analyst Kate Calvert noted: "We remain sceptical on the ability of a new CEO's ability to achieve sustainable growth and believe the business remains structurally challenged."

For the 19 weeks to 9 January, group like-for-like sales increased 1.9%, and grew 3.5% in constant currency. Online sales were up 12.1%, and gross margin was within its FY16 guidance of flat to growth of 50 basis points.

Matalan

UK value fashion and homewares retailer Matalan saw store revenue fall 6.4% to GBP133.8m (US$193.1m) during the 5 weeks to 2 January, compared to GBP142.9m in the same period a year ago, hurt by suppressed demand in the winter market. Online revenue declined to GBP2.7m from GBP5.5m. The company's full priced sales mix was up 2.6% percentage points, and sale launch volume was in line with last year. 

For the 13 weeks to 28 November, revenue edged up 1.5% to GBP302.5m, while EBITDA declined 18.7% to GBP32.2m. As a result, the retailer has cut its full-year EBITDA guidance to range from GBP54m-56m, down from its previous target of GBP60m-65m. 

Verdict Retail analyst Nivindya Sharma believes Matalan "must improve product appeal, customer service and the instore and online shopping experience to drive footfall and communicate value for money". She added: "Extending its reach to the lucrative 16-34 market by raising its brand profile and making ranges more stylish are also vital steps it must take to avoid another disappointing year in 2016."

House of Fraser 

Department store retailer House of Fraser revealed strong Christmas trading figures, thanks to a 40% jump in Black Friday online sales. For the six weeks ended 2 January, like-for-like sales were up 5.3% against the prior year period, and up 16.7% against 2014. Black Friday total sales climbed 10%, while online sales for the promotional day were up over 40% on last year. Cash gross margins grew 6.4% against the comparative period last year, with an increase in margin rate of 40 basis points. 

In the seven days before Christmas, like-for-like sales grew 6%, with a positive performance from both online (up 61.8%) and bricks and mortar stores (up 2.2%). The momentum continued in the seven days after Christmas, with like-for-like sales increasing 6.8%.

Sports Direct

Sports Direct cut its full-year profit guidance after mild weather hampered Christmas sales and it saw a "deterioration of trading conditions on the high street and a continuation of the unseasonal weather over the key Christmas period". 

As a result, the retailer added that is it "no longer confident" of meeting its adjusted underlying EBITDA target (before share scheme costs) of GBP420m (US$612.1m) for the full year. With similar trading conditions expected between now and the end of April, Sports Direct predicts adjusted underlying EBITDA (before share scheme costs) will range from GBP380-420m.