Retailers put the spotlight on snow business

SOME of Britain's biggest retailers will reveal the impact of the snow and economic uncertainty on their Christmas sales figures when they publish trading updates this week.

Analysts believe fashion chain Next, which delivers a trading update on Wednesday, is likely to have fared better in the post-Christmas sales period, with shoppers bringing forward purchases before the January VAT rise.

The trading update only covers the 24 weeks to Christmas Eve and analysts will hope the company provides some extra comment on trading in that crucial sales period, as well as further guidance on margins in 2011.

Disruption caused by the recent snow has made forecasts difficult, but analysts at UBS predict a drop of 4.5 per cent in retail like-for-like sales in the 24 weeks to Christmas Eve.

This includes an already-reported third quarter decline of 3.3 per cent and suggests a fall of around 6 per cent in recent weeks as Next battled tougher comparisons with a year ago, as well as the weather conditions.

Greetings card retailer Clinton Cards, which owns the Birthdays chain, will face tough comparisons with a year earlier when it reports sales figures from the run-up to Christmas on Thursday.

Like-for-like sales for the Clinton brand in the five weeks to January 3 last year were 3.6 per cent higher, while the Birthdays performance also continued to improve after an overhaul of its supply chain.

Last year's figures represented a recent high point for the 800-store company as it later disappointed the City with a profits warning.

It prompted the company to unveil plans to update "the look and feel" of its Clinton stores, including a new logo, revamped shop fronts and redesigned uniforms.

Work on the redesign is taking place, but Clinton hopes to unveil a new website in January encompassing the updated branding and a feature offering personalised card and gift services.

Group managing director Clinton Lewin said aspects of the brand, founded by his father and group chairman Don Lewin in 1968, were "old fashioned" and needed to be brought into the 21st century.

Domino's Pizza is expected to continue its strong performance on Wednesday when it updates the City on trading for the final quarter of 2010.

The takeaway and delivery company should continue to benefit from the trend of "the big night in", which sees consumers indulging on affordable treats at home rather than heading out on the town. This will have been reinforced by the final of ITV's The X-Factor, which drew almost 20 million viewers last month.

And in the last two seasons of heavy snow – January 2010 and February 2009 – Domino's reported high like-for-like sales growth.

Seymour Pierce stockbrokers said there were a number of reasons for this, including the scooter delivery system that beats larger vehicles and the fact that its franchisees are highly motivated and don't take days off.

Douglas Jack, an analyst at Numis, forecasts that Domino's will report strong sales growth despite the disruption caused by the snow.

Domino's has opened some 50 new franchise stores in the past year, bringing its total number of outlets to around 643, and expects to continue at this pace for the foreseeable future.

The group has said that Yorkshire is a key area for expansion. It already has around 35 Yorkshire stores.

Last year, the company said it had identified nine target areas in Yorkshire where it was actively looking for new stores, but declined to say where they were for competitive reasons.

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