Christmas on the UK high street: where did shoppers spend their money? | Business

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The crucial pre-Christmas trading period for retailers was disrupted in 2020 by stop-start coronavirus restrictions, which forced shops selling non-essential items to close their doors for certain periods of time, following months of shutdown earlier in the year.

As the nation stayed at home, shoppers bought leisurewear but overall fewer items of clothing, knocking sales at fashion retailers. Meanwhile, the big supermarkets benefited from their essential retailer status, as consumers spent more money on groceries instead of in restaurants, cafes and pubs.

Sainsbury’s – Winner

The UK’s second-largest supermarket reported a 9% rise in like-for-like sales during the Christmas period, from 1 November to the start of January, as shoppers filled their baskets with luxury items including champagne and steak.

Sainsbury’s online sales also boomed over the festive period, increasing by 128% to account for almost a fifth (18%) of total sales, allowing the retailer to raise its profit expectations for 2020 by £60m.

However, doing business in a pandemic also comes at a cost and, as a result, Sainsbury’s forecasts that its 2020 profits will be 44% lower than the period year. The chain has also pledged to pay back the £410m business rates relief which it was given by the government last spring.

Morrisons – Winner

Luxury festive treats also helped drive Morrisons sales 8.5% higher during the festive period, as shoppers splashed out on champagne and salmon to enjoy at home.

Morrisons said online sales had tripled, and it also benefited from its deal with Amazon to supply wholesale products to convenience stores.

The supermarket was the only one of the four largest chains in the UK to gain market share over the Christmas period, according to analysis from research group Kantar, thanks to price cuts and an increase in home deliveries.

However, the retailer expects its profits to be in line with expectations, less than half the £420m to £440m it had once anticipated, after it agreed to pay back £230m received from the government’s business rates relief.

B&M – Winner

The fast-growing discount retailer enjoyed strong sales in the run-up to Christmas, topping off a knockout year. B&M said sales in its UK stores soared by 21% in the three months up to Boxing Day, despite not selling anything online.

The chain, which supplies everything from tinned goods and pet food to wallpaper and garden sheds, has benefited from its essential retailer status. In addition, many of its stores are located on retail parks, which wary shoppers have tended to favour instead of high streets.

B&M’s owners, the billionaire Arora brothers, awarded themselves a £30m payout following soaring Christmas sales, pushing their total dividends received over the last 12 months to almost £100m.

As a result of the lockdown sales boom, B&M intends to open up to 45 new stores by March, a third more than it had previously planned.

JD Sports – Winner

JD Sports, Britain’s biggest sportswear group, has been able to shrug off many of the problems faced by retailers during the pandemic, and hiked its profit forecasts following robust trading.

The retail chain reported that its total revenues for the past 22 weeks of 2020 were 5% higher than the previous year, leading it to forecast profits for the last year of at least £400m, well above analysts’ expectations of £295m.

JD said that its customers had “readily switched between physical and digital channels” but warned that Covid restrictions were likely to keep its UK stores closed until Easter.

The casual wear group, which also owns brands Size?, Blacks Leisure, Millets and Go Outdoors, said earlier in the pandemic that its athleisure products had proved popular with customers stuck at home.

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The sportswear chain had been in rescue talks to buy beleaguered department store chain Debenhams, but pulled out when Topshop-owner Arcadia went into administration at the end of November.

Marks & Spencer – Loser

Christmas trading was a mixed picture at high street stalwart Marks & Spencer, as store closures knocked its sales of clothing and homeware, while its food halls fared better during the key period.

Sales of clothing and homeware dropped by a quarter during the 13 weeks to 26 December, as consumers turned to pyjamas rather than party outfits, with a near halving of in-store sales only partly balanced out by a rise in online sales.

The retailer’s food halls traded more positively, with a 2.6% rise in sales at stores open for at least one year, although it suffered from the closure of its large network of in-store cafes.

M&S warned that the trading outlook “remains very challenging” because the latest lockdown and store closures could last until Easter.

Greggs – Loser

Covid heralded a reversal in fortunes for Greggs bakery chain, famous for its steak bakes and vegan sausage rolls, which predicted it will slump to its first-ever annual loss as a result of the coronavirus pandemic.

The Newcastle-based chain’s sales dropped by more than £300m year on year in 2020, leading it to forecast a £15m annual loss, its first since listing on the stock market in 1984, after Covid restrictions closed its stores and consumers made lunch at home rather than buying a sandwich while out and about.

Greggs, which has more than 2,000 outlets in the UK, does not expect profits to recover to pre-Covid levels until 2022. However, the retailer’s expansion plans remain on track and it plans to open a further 100 stores this year.

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Source: The Guardian
Keyword: Christmas on the UK high street: where did shoppers spend their money? | Business

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