Bad weather forecasts

Margins fell by 1% too, partly due to a near 13% fall in white goods sales and the need to respond to Currys' reduced prices on televisions.

Jean-Noel Labroue, chief executive said: "We are still in the middle of the storm.  Trading conditions across all our markets deteriorated particularly in the UK and have not changed since the period end.  As we did not expect to see any improvement in the short term we put in place a robust action plan to protect margins, adjust costs and generate cash."

It's a similar picture over at DSGI.  For the 16 weeks to 23 August, like-for-like sales at PC World tumbled by 12% and Currys by 7%.  Gross profit margins are reported to be down by 0.75%.  The group is now looking to cut costs by a further £25 million, having already delivered a £50 million reduction. 

"We are not expecting a quick recovery," said chief executive John Browett.  "From what we can see from customers they are taking to heart the credit crunch and therefore I think it's going to be quite a while before we'll see anything from the market which will help us.  Certainly we don't see any recovery this year or next year."

Similarly at Jessops, the troubled photographic retailer, like-for-like sales have continued to fall - down 6.4% in the year to the end of September; that's a point worse than the figure reported just two months ago, so the final few weeks were particularly tough.  However, margin was up by about 0.8 points ‘despite the challenging retail environment throughout the key summer trading period'. 

Write-down

Sales at Argos dropped by 5.8% on a like-for-like basis in the quarter to 30 August, though consumer electronics remained positive, boosted by strong computer game sales.  Home Retail Group which owns the chain may need to write down hundreds of millions of pounds in its Homebase business where sales were down by over 8%. 

Chief executive Terry Duddy stressed that this is simply a balance sheet issue, but warned about trading prospects: "It's not about this quarter; it's about a more bearish view or a more realistic view of what's coming in the next couple of years.  What we have seen in the retail sector is that values have dropped substantially over the last year or two."

Indeed they have.  Over the year share prices have tumbled much further than the general index; both Kesa and DSGI are over 60% down, Home Retail 40% and Jessops nearly 70% (though despite its trading and reorganisation difficulties it has managed to agree an extension to its banking facilities until 2011).

New stores impact

The one retailer that generally continues to project a positive slant on sales is John Lewis whose weekly sales figures are now very widely quoted.  It may be doing better than most, but whilst other retailers quote like-for-likes, John Lewis headlines total turnover figures. 

Clearly that's not an issue when the chain size is stable, but in the past year the Partnership has opened three new stores (in Cambridge, Liverpool and Leicester) so comparisons are inevitably distorted. 

JLP now trades from 27 stores and in the nine weeks to 27 September, its total sales were up by just 1% year-on-year - with only two stores (Oxford Street, London, and Aberdeen) and its John Lewis Direct business (up 32%) ahead year-on-year.  Down around 7% is the norm for the others.

In total, electricals and home technology sales rose up by 3%, aided by the three new stores.  It acknowledges ‘the market is tougher than it's been for a long while' and on electronics ‘keen pricing has been key'.

Printer friendly version

Email this article to a friend

Bookmark this

---