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EDITIONS
 Tuesday, 14 January, 2003, 14:53 GMT
Price-cutters clean up over Christmas
Belinda Earl and Matthew Roberts (finance director)
Debenhams' Belinda Earl: Putting a brave face on it
Christmas sales on the High Street were not as bad as some experts had feared, latest figures suggest.

We are still looking at growth, that is the main thing

Simon Irwin, BNP Paribas

Bosses' group the CBI was predicting the worst Christmas-trading period in 10 years.

But a slew of figures released earlier on Tuesday showed discount retailers in particular had a cheery festive season.

While some big names, such as Debenhams and Mothercare, struggled to meet expectations, retail experts said the picture could have been a lot worse, given the slowdown in the wider economy.

'Demand slowing'

Simon Irwin, of investment bank BNP Paribas, said that, with a few exceptions, sales were still up on last year.

"The fact is we are still looking at growth, that is the main thing," he told BBC News Online.

Richard Hyman, chairman of Verdict Research, said: "Growth in consumer demand is slowing.

"The 5% that we have seen for most of the past two years is going away gradually.

"That figure is going to be closer to 3.5-4.0%.

"That will be enough for the really good retailers - the people whose proposition is really tuned into its customer base."

There would be more pressure on retailers who have not performed well, he added.

And there was also move towards the "value" end of the market, with companies such as Argos and New Look offering good quality products at bargain prices.

'Encouraging' sales

But big High Street names such as Debenhams - which saw its share price dive 6% following the release of its latest figures - would continue to perform well, he added.

Debenhams saw an increase of 2.8% in like-for-like sales - a measure which strips out the effect of new store openings - for the 19 weeks to 11 January, with a particularly strong performance from cosmetics and gifts.

It also reported an "encouraging" start to the sales season.

But this was not enough to satisfy the City, which had been expecting growth of around 5%.

Baby blues

Debenhams also sounded a gloomy note about the prospects for the UK economy as a whole.

"Looking forward, we remain cautious about the economic outlook for the UK consumer," chief executive Belinda Earl commented.

There was more bad news at loss-making Mothercare.

Last year, the group's festivities were marred by distribution problems at its new Northamptonshire warehouse.

But things were scarcely better this time around, with sales sliding 1.1% over the all-important Christmas season.

Tesco bonanza

A spokesman said many people had put off purchases until after Christmas and the January sales were going "relatively well".

Ann Summers continues to show that people are still spending on the high street when it comes to improving their sex lives

Jacqueline Gold, chief executive
But the company, which has 247 stores, is currently taking a long, hard look at its operations.

New chief executive Ben Gordon has said his priority was to "fix the retailing basics".

Margins squeezed

It was a different story at Tesco, where booming sales of DVD players, CDs and widescreen televisions helped make it a merry Christmas.

Like-for-like sales for the seven weeks to 4 January rose 4.8% across the group's 730 UK stores.

PC sales shot up 130% against the previous year's festive trading period.

Other good sellers were computer games - 86% ahead of last year - and music CDs, which soared 91%.

On the groceries side, Tesco own-brand champagne, smoked salmon and British-made sausages all did well.

Value clothes retailer New Look also had a good Christmas, with like-for-like sales for the seven weeks to last Saturday up 5.1%.

But the City was not impressed with a 1.3% drop in gross profit margins, and its shares fell 6%.

E-commerce boost

Perhaps the biggest retail success story of the festive period, from the figures in so far, is GUS, which owns catalogue retailer Argos.

The group's credit checking agency, Experian, saw a whopping 32% increase in business in the run up to Christmas compared to last year.

And fashion label Burberry, which is part-owned by GUS, saw an increase of 7%.

Sales were also up a healthy 7% at Argos.

One of the biggest growth areas was sales over the internet, which reached 75m, an increase of two-thirds over the same quarter last year, the company said.

E-commerce now accounts for 4% of Argos sales and the company claims it was the third most-visited retail website in the UK, over the Christmas period.

Sex sells

Top-sellers across the group were DVD players, widescreen TVs, karaoke machines and former boxer George Foreman's grilling machine.

The figures will be all the sweeter for GUS bosses, coming after last week's profit warning from Dixons, which rivals it for domination of the High Street electrical goods market.

Champagne corks will also be popping at lingerie and sex toy merchants Ann Summers, which saw a 22% increase in like-for-like sales.

The Ann Summers website saw a 70% sales increase.

Chief executive Jacqueline Gold said: "It has been difficult to gauge how retail would be affected over the Christmas period in light of recent economic speculation.

"However, Ann Summers continues to show that people are still spending on the high street when it comes to improving their sex lives."

Pub group Wetherspoons saw an increase in sales on last Christmas of 4.2%.

See also:

14 Jan 03 | Business
13 Jan 03 | Business
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