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Retail sales declined for the 9th month in March, but were much better than expected by retailers as big discounting and sunny weather helped clothing and shoe retailers in posting higher sales.

According to sales monitor of the British Retail Consortium-KPMG, although like-for-like sales of retailers were down by 1.2% in March, it was an improvement on 1.8% fall posted in February. The year-on-year rise was 0.6%, which is better than 0.1% in February.

The industry experts are not reading too much into March data, since sales were boosted by the Easter shopping and also hit by snowy weather and cold in the same period.

According to Helen Dickinson, KPMG’s head of retail, 0.6% growth in total retail sales is not significant enough, but is better than expected.

March 2009 was the first month since May last, as clothing retailers posted sales increase, courtesy hefty discounting and warm weather. It was also the best month for footwear retailers, whose strong sales were driven by women’s shoes. However the floor-covering and furniture retailers posted 10% fall in sales, the biggest in last 9 years.

While like-for-like food sales grew by 4.7%, non-food sales tumbled by 4.3% in March. Internet, phones and mail order sales grew by 10.8%

Despite improvements in March, more retail failures are likely to take place in the coming months, believes Robin Knight at Zolfo Cooper.

Game Group, specialist in video games, registered record full-year profits, while Thorontons reported jump in third-quarter figures, giving boost to expectations that retail sector is now on the path to recovery.

Game Group, with 1,342 Gamestation and Game stores located in 10 countries, recorded 75% jump in pre-tax profits to £119.6 million during 53 weeks ending 31 January 2009. The impressive performance is credited to purchasing efficiencies of the Gamestation acquired last year.

Increase in Game’s total sales was 32.2% to £1.97 billion, as women, families and over-35s had been flocking in large numbers to purchase software games, including Grand Theft Auto IV and Wii-fit. According to the chief executive, Lisa Morgan, of Game Group, collapse of Woolworths and Zavvi, retailers in entertainment, also provided stimulus for growth.

However there was decline of 6.3% in Game’s underlying sales during last 11 weeks. Its gross margins showed improvement of 150 basis driven by software products of higher margins in the sales mix.

Chocolate retailer Thorntons’s own-store sales are also up by 9.3% to £35.3 million, with increase of 3.3% in like-for-like sales during last 14 weeks. Total sales, including multi-channel, franchise and commercial units, increased by 11.7% to £58.6 million and full-year pre-tax profits are expected to be around £5 million.

Solid trading on the eve of Easter break buoyed retailers’ hopes that the worst days of their business downturn are over, but the industry experts have cautioned not to read too much into few days’ results.

Food sales surged ahead while fashion, DIY and department store chains reported relatively robust trading.

John Lewis’s sales of £48.4 million, at 27 department stores for the week ending Saturday 11th April, were down only by 1.5% over last year, helped by Good Friday. Director Knowles claimed that sales stack up was well when compared with high street as a whole.

According to him rise in fashion sales for the week was 6%, while children’s wear, particularly shoes, also registered strong performance. He remarked that parents were seen not cutting back on children’s items.

In central London, according to New West End Company, footfall was up by 10.5% on Monday, in comparison with same holiday period in March last year. The weekend sales was up 2% overall.

Easter is normally the biggest trading weekend and also a key indicator of coming months’ sales pattern for the DIY retailers. The B&Q spokesman informed that there was brisk sale of paint, decorative accessories and wall papers in the first half of weekend and as the weather grew warmer, sales of grow-your-own seeds and greenhouses increased substantially.

Asda’s spokesman also reported very strong business over Easter and added that stores were as busy on Good Friday as every year during Christmas.

Debenhams added optimism to the high street retailers by declaring sales growth for the first time in last 18 months. It joined group of retailers which have begun to defy recession. The department group’s shares also soared after it announced pre-tax profits ahead of City forecasts.

Debenhams’ deputy chief executive, Michael Sharp, stated that consumers have started spending once again on account of low mortgage costs and falling utility bills. He claimed that people were having more disposable income now than they had last year when interest rates and energy bills were at their peak.

Debenhams has been performing well as its sales in 154 stores across the UK grew by 6.1%, with 1.9% increase in like-for-like sales over 7 weeks to April 18. The sales were largely boosted by its Designer range and own-bought ranges including Maine New England.

During 26 weeks at the end of February, Debenhams’ headline pre-tax profits rose by 10.7% to £104.2 million, nearly £10 million above the market forecasts.

The star performers of the retailer were Jasper Conran and John Rocha, where overall sales rose by 11%. Michael Sharp termed this performance as pleasing particularly because trading conditions up to Christmas were most volatile ever seen before. But he is cautious about remaining period of current financial year and did not feel that consumer downturn had reached its bottom.

Debenhams will be opening nine stores during next two years, leading to creation of 1,800 new jobs.

The biggest property companies of the UK and retail groups, including Land Securities, British Land, Topshop-owner Arcadia, have decided to call a truce on their battle over rent and service charges.

Landlords of over half of all shopping centres in the UK, including Westfield, Land Securities and Capital and Regional will draw a plan that will provide a lifeline to store groups, which are struggling for survival in the prevailing economic downturn.

The move is aimed at reducing retailers’ service charges by 20% that will save tens of millions of pounds in retailers’ bills. This will also save number of chains from going into administration.

In a fierce war of words, retailers had alleged landlords of demanding very high quarterly rents and charging unjustified service charges. But in a significant deviation from rigid stand, landlords are now ready to outline ten-point checklist to minimise retailers’ costs.

The truce was brought about by Francis Salway, president of the British Property Federation and chief executive of Land Securities, Liz Peace, chief executive of BPF and retailers including Arcadia owner, Sir Philip Green. Salway described this as a big step forward which showed what could be achieved through dialogue.

Under existing service charge system, extra costs incurred by the landlords can be effectively passed on to retailers. According to new system retailers will be able to save money in ten areas from waste management costs to security and procurement of third party services.

This is the second major relief for retailers in a week. The Treasury had backed down on 5% hike in Business Rates a few days ago.

Marks and Spencer has registered encouraging rise of 1.9% in its sales over first quarter of this year, despite decline of 4.2% in its home market.

Its sales promotion tactics of Dine In For £10, contributed to results that were beyond expectations and led to major boost in share prices.

Company’s gross sales in Britain were 0.3% less than last year, food sales witnessed marginal 0.4% increase but sales of general merchandise fell 1.2%. However, sales outside Britain registered impressive growth of 23%.

In November 2008, Marks and Spencer’s net profit was down by 43% to £223 million in the first half of the year. Decision to close down 27 stores as cost-cutting measure and to publish annual results on May 19, was announced in January.

Sir Stuart Rose, executive chairman of M&S, acknowledged that customers were feeling the pinch and M&S was trying its best to fulfil their expectations. He went on to add that company could not always succeed in this endeavour, but in last 6 months could improve substantially in fulfilling those expectations. He claimed that customers were responding positively as their traffic has started outperforming the market.

Sir Stuart stated that M&S has sharpened its prices and believes customers know it gives them quality.

It’s one of the lesser known victims of the need for faster checkouts at supermarkets. More and more standard tills with belt conveyors are being replaced with faster, more efficient basket tills and self service points.

Self service till points have been popping up in increasing amounts over the last few years. This is due to the fact they can usually handle 4 people in a space usually taken up by or 1 or 2 customers. Not only is this space efficient but also helps save time serving individual customers.

Another benefit of self service tills is that often 1 member of staff can look after 2, or even sometimes 4, customers at a time. Some self service areas still make use of belt conveyors, but often they are usually just simple roller conveyors.

Belt conveyors have been a standard at supermarket tills worldwide for many years and although it isn’t likely they will be completely abandoned there is a definite sense that we are gradually moving away from this particular piece of equipment.

On the plus side, in exchange for less conveyor belts, customers and supermarkets are seeing benefits in smaller queue times and lower staff requirements on the tills.

Department store chain Debenhams, defying gloom on high street with better than predicted first-half performance, is going to create 1,200 new jobs over next 2 years.  The retailer would open additional 8 stores in the UK, including outlets in Newcastle-upon-Tyne, Wakefield and Kidderminster, before end of 2011.

Debenhams claimed that it was not an acceleration of store opening programme, but reaffirmation of management’s confidence in its business strategy when many retail rivals were cutting back on their expansion plans.

Debenhams’ like-for-like sales for 26 weeks to February 28 fell by 3.6%. This was more than expectations and included single day loss of £200,000 at its Oxford Street store due to bad weather in early February. Sales growth was attributed to its own bought ranges namely Designers at premium lines.
According to its chief executive, Michael Sharp, Debenhams had increased market share in men’s and childrenswear.

Debenhams’ 26 weeks’ gross transaction value was up 0.3% than previous year. This, coupled with higher gross margins, would result in first-half pre-tax profit exceeding £92 million it registered in same period last year.

However, Debenhams did not clarify on plans to raise capital for expansion, although it already has net debt of over £900 million. Lack of clarity on the issue unnerved investors and resulted in plunge of 5p or 10.87%, reversing 15% gain made on Monday.

UK citizens will have to wait till first quarter of next year for the opening of Best Buy’s first store in the UK.

Best Buy Europe, which is the joint venture between Carphone Warehouse and US electrical giant, was scheduled to open its first store in the UK this year. The revised plan is to open 4 more stores in quick succession next year. Read the rest of this entry »