finance

A flurry of results is about to reveal what retailers really got for Christmas


Coronavirus was without doubt the Grinch that stole Christmas, and this week will bring an avalanche of trading figures revealing how well the UK’s retailers navigated what the chief executive of Marks & Spencer calls “near-impossible trading conditions”.

The scene was set last week by updates from supermarkets Morrisons and Sainsbury’s, which, like other “essential” retailers, have prospered in locked-down Britain. For poor old non-essential retailers such as M&S, where clothing sales dropped by a quarter, the numbers in its Christmas trading statement showed that without your stores open you needed a damn good website – such as Next’s, which helped the company almost match its 2019 sales.

The eclectic trio of Games Workshop, JD Sports and the Hut Group resume the trading-update action on Tuesday, with all three likely to tell a positive story for the important festive period. While JD’s sales will have been dented by store closures, it has been trading well online and has profited from runaway demand for casual clothing and trainers.

Games Workshop and the Hut, which is behind websites such as Lookfantastic, have benefited from people pursuing their hobbies while stuck at home, whether that is painting orcs or fingernails.

The Hut is on a roll: its shares have raced ahead since its flotation in September. Games Workshop, best known for its tabletop-game franchise Warhammer, has been around longer and is expected to report profits of no less than £90m, up from last year’s £59m, according to the Share Centre.

Tesco, which leads a pack of at least six retailers, including Primark, reporting on Thursday, is another likely winner. Sainsbury’s – which wowed the City with a £60m profit boost – and Morrisons have already delivered better-than-expected numbers.

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The expansion of Tesco’s home delivery service will have helped its performance. However, the latest figures from analysts at Kantar show the UK’s biggest retailer losing market share, with no-frills chains Lidl and Iceland among the standout performers in the annual battle to sell turkeys and brussels sprouts.

The news from Primark is likely to be less positive. The cut-price fashion chain’s owner, Associated British Foods, warned on New Year’s Eve that Primark would miss out on an additional £220m in sales, as its stores had been forced to close again. When open, Primark’s shops have enjoyed phenomenal sales but without a website to sell with, the business is paralysed without its stores.

Primark’s fortunes will be likely to contrast with those of Asos, the clothing website for teens and twentysomethings, which has benefited from a slick delivery network able to satisfy demand for items ranging from stretchy leggings to face cream. Earlier this year the company was struggling to secure enough stock of some items, such was the unexpected demand: we will find out if that affected sales in December.

The Shore Capital analyst Clive Black says 2020 was a “distorted” rather than merry Christmas for the high street. Of the winners so far, the City had expected the grocers to do well but Sainsbury’s had pulled the “rabbit out of the hat”.

“Online retailers will have done very well,” says Black. “It is the non-essential, store-based retailers that have absolutely had their legs taken away. You’ve seen all the issues around Arcadia, Debenhams and Edinburgh Woollen Mill [which have all entered administration]. For store-based non-essential retailers, 2020 was a calamity of a year.”

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