Who were the retail winners and losers this Christmas?

Christmas hasn't been as brutal for retailers as analysts feared, with clear winners and losers emerging from the fray.

The Man on the Moon ad helped John Lewis boost Christmas sales
The Man on the Moon ad helped John Lewis boost Christmas sales

Unseasonably warm weather and consumers choosing to spend on leisure rather than retail had some fearing a slew of administrations in January.

This year fashion etailer Atterley Road, a firm backed by former Tesco boss Sir Terry Leahy, has entered into administration and ceased trading and Blue Inc has revealed it will close 60 shops and cut 500 jobs.

But apart from these two casualties, this Christmas has been relatively benign as retailers adapted to changing trends.

Yet as the grocery battle continues to take its toll, what constitutes a winner has changed significantly and even the slightest sales bump is welcomed with rapture by City analysts.

Winners

Aldi and Lidl see massive sales growth

The German discounters continue to record massive sales growth as they increase the size of the store estates.

Their Christmas marketing has continued the strategy of appealing to a middle-class audience who a few years ago would not have dreamed of shopping at either.

The strategy is clearly still working, according to sales data from Kantar Worldpanel for the 12 weeks to 3 January. Lidl was the fastest growing retailer overall, with sales up by 18.5%.

Kantar Worldpanel head of retail and consumer insight Fraser McKevitt said: "The discounters are continuing to establish themselves in the minds of British consumers – almost one in eight did their single biggest December shopping trip in Aldi or Lidl."

The bigger players are fighting back and the total share of the market held by Aldi and Lidl has dipped from the 10.0% achieved just before Christmas.

Tesco's turnaround is working

In days gone by a 1.3% increase in like-for-likes over Christmas at Tesco would have been declared a disappointment, now it is a source of celebration among commentators. It adds further weight to the argument that Dave Lewis’ turnaround at Tesco is working.

Phil Dorrell, partner at retail consultants Retail Remedy, said: "Tesco were not going to be left out in the week of Christmas trading surprises, delivering extraordinary like-for-like sales for the Christmas period.

"The Christmas performance is more remarkable when considered in relation to Q3 which was down 1.5% like-for-like in the UK. The extra staff, Brand Guarantee and strong range delivering at the critical time.

"The Tesco marketing campaign didn't play to our emotions but it played to the hassles and pressures of Christmas in a humorous way, connecting with the customer."

Morrisons reverses decline at last

Perhaps the biggest surprise of the Christmas trading season has been Morrisons returning to like-for-like sales growth after a sustained period of decline.

Like-for-like sales were up 0.2% in the nine weeks ending 3 January – its first like-for-like increase in two years. The supermarket also confirmed that interim marketing director Andy Atkinson will take on the role full time.

Analysts were pleasantly surprised by the news, having expected a 2% fall in like-for-like sales over Christmas. Morrisons said it was "working at pace to improve all aspects of the shopping trip" and customer satisfaction levels were "significantly ahead of last year".

Asos sees international recovery

Asos was boosted by a strong recovery in its international business as total retail sales rose 22% to £206.2m in the four months to December. This marked an acceleration from its 15% growth it recorded in the last six weeks of 2014.

Sales at the UK business grew by 25% as it continues to record strong growth in its core home market under new boss Nick Beighton following the departure of founder Nick Robertson.

Debenhams surprises with sales rise

Debenhams surprised everyone when it recorded decent sales growth over Christmas. It reported a 3.7% rise in like-for-like sales for the seven weeks to January 9 as online sales jumped 15.4%.

However,  online remains a relatively small proportion of its sales compared to other department stores. Analysts including Peel Hunt credited the Christmas performance to "excellent execution".

Debenhams has had lower reliance on outerwear and clothing, which has helped significantly during the mild winter.

Research group Conlumino explained: "It reduced stock levels across clothing – particularly high margin, weather-sensitive categories – enabled the department store to enter the post-Christmas period with less discounted stock compared to the same period last year."

Losers

Marks & Spencer boss will step down

Marks & Spencer was perhaps the biggest loser this Christmas as boss Marc Bolland revealed he would step down this year as like-for-like clothing sales fell 5.8%.

The results dashed hopes for a recovery in its general merchandise division, but there was some solace in another good showing from its food division, which increased like-for-like sales by 0.4%.

Bolland, who has been at M&S’s helm for six years will be succeeded at the end of the current financial year by Steve Rowe, executive director of general merchandise.

Home Retail sees Sainsbury's bid

Argos and Homebase-owner Home Retail has continued to struggle as it continues the digital transformation of the business. Argos’ like-for-like sales fell by 2.2% in the 18-weeks to the 2nd January 2016. However, new digital concession locations contributed 3.1% to growth.

In Homebase, like-for-like sales grew by 5% while total sales declined by 4% following an aggressive store closure program.

Nevertheless, the recent trading difficulties experienced by Home Retail have not put off Sainsbury’s, which is eyeing an acquisition of Home Retail.  

It has emerged Home Retail is considering off-loading Homebase to Australian retail group Wesfarmers for £340m, which would make Home Retail a much more attractive acquisition target for Sainsbury’s.

Asda has the toughest Christmas

Walmart-owned Asda has suffered the toughest Christmas of the big four supermarkets, according to Kantar Worldpanel data.

Sales at Asda slumped 3.5% in the 12 weeks to 3 January, reducing its share of the grocery market by 0.6 percentage points to 16.2%. Asda, which is a private company, is yet to reveal its own figures for Christmas trading.

A mixed bag

Sainsbury’s praises 'Mog' Christmas campaign

When Sainsbury’s first reported a 0.4% dip in third quarter like-for-like sales over the Christmas period it was hailed as a strong performance in an extraordinarily tough grocery market.

But following the surprise growth at Morrisons at Christmas, the Sainsbury’s result is no longer as positive as it first appeared.

Arch-rival Tesco also suffered a like-for-like sales decline in the third quarter, but its sales growth over the nine week Christmas trading period will be of cause for concern for Sainsbury’s.

Sainsbury’s said its much-lauded ‘Mog the cat’ Christmas ad was a "huge success, with nearly 37 million online views and the exclusive 'Mog’s Christmas Calamity' book topping the UK bestselling book charts for four consecutive weeks."

Burberry buoyed in China

Burberry reported a 1% rise in third-quarter sales as like-for-like sales were unchanged year on year, an improvement on the 4% fall in the second quarter.

Burberry was buoyed by growth in mainland China and strong demand in Europe, but its overall performance was weighed down by Hong Kong and Macau. Following the results, Burberry said the outlook for the luxury sector remains uncertain.

John Lewis up, Waitrose down

While like-for-likes at John Lewis department stores rose over Christmas, they fell at sister retailer Waitrose.

John Lewis recorded a 5.1% like-for-like sales jump in the six weeks to January 2. Chairman Charlie Mayfield said this was a result of "significant investment in our distribution and IT capability".

Once again the John Lewis Christmas ad won many plaudits, which meant the retailer was at top of mind this Christmas.

Meanwhile, Waitrose’s total sales grew 1.2% to £860m but slipped 1.4% on a like-for-like basis as it too struggled in the tough grocery environment. 

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