UK Retail Briefing - October 2018

ANALYST COMMENT – LOOKING FORWARD TO CHRISTMAS
Retail sales growth stable
Figure 1: Retail sales growth, value and volume, 2016-18
The economy
Figure 2: Real incomes, 2015-18
Two other factors need to be mentioned
Consumer confidence starts to fall
Figure 3: Consumer confidence, 2015-18
Are they right to be cautious?
Black Friday – did it peak last year?
Impact on Christmas sales
Christmas 2018
And what about 2019 – the Brexit year
UK RETAIL SALES
Key points
Retail sales
Figure 4: Retail sales trends, 2017/18
Figure 5: UK retail sales y/y growth, BRC vs ONS, July 2016-September 2018
John Lewis
Figure 6: John Lewis Department Stores: year-on-year growth, Jun 2017-Aug 2018
Inflation
Figure 7: Annual percentage change in the consumer price index for selected product groups, 2017-18
Inflation and wages
Figure 8: Real wages growth: wages growth vs inflation, Jan 2015-Jul 2018
Confidence
Figure 9: Mintel financial confidence tracker, January 2016-September 2018
Looking forward
SECTOR FOCUS – HOUSEHOLD GOODS
The sector – What’s included
Figure 10: Consumer spending on household goods, by product type, 2017
Figure 11: Consumer spending on household goods, 2013-17
Figure 12: Consumer spending growth, overall versus household goods, annual % change, quarterly, 2015-18
Figure 13: Growth in spending on household goods products, quarterly % change year on year, 2017-18
Falling inflation
Figure 14: Price inflation on household goods categories, % change over 12 months, August 2017-August 2018
Specialists’ sales improve in 2018
Figure 15: Household goods specialists’ retail sales, monthly % change year-on-year, 2017-18
Signs of pent-up demand for spending on the home
Figure 16: Spending and intention to spend on the home, January 2016-September 2018
Housing market remains a concern
Figure 17: Residential housing transactions over £40,000, monthly year-on-year % change, seasonally adjusted, September 2017-August 2018
Where next?
LAUNCH ACTIVITY AND INNOVATIONS
UK: Morrisons launches new range of vegan ready meals
UK: Sainsbury's to test beauty aisles
UK: Tesco opens the first two Jack’s discount stores
UK: Allbirds to open first UK store
UK: M&S launches clothing range for children with disabilities
UK: BHS to return to high street with Beales concessions
HEADLINES FOR THE MONTH
Co-ops
Grocers
Other food specialists
Clothing retailing
Mixed goods retailing
Department stores
DIY retailing
Music and video goods retailing
Furniture retailing
NEWS ANALYSIS – FOOD AND DRINK
 CO-OPS
UK: Co-op
…profit rises driven by strong food sales
…to ban single use plastics
UK: Scotmid Co-operative’s half year profit benefits from hot weather
 GROCERS
UK: Aldi to create 5,000 new jobs in the UK with 130 new stores
UK: Lidl
…opening 38-acre warehouse in Leeds
…pledges to scrap black plastic packaging
UK: Morrisons
…revenue increases by 4.5% for first half
…facing employment tribunal claim over equal pay
UK: Sainsbury's
…Asda merger could result in 400 stores lost
…Asda merger referred for further investigation
UK: Tesco
…group sales up 12.5%
…set to launch discount chain Jack’s next week
…to scrap best before dates on fruit and vegetables
…Jamie Oliver to join Tesco to help encourage healthy eating for customers
UK: Waitrose steps up action to remove plastic bags
…trial 2 hour same day delivery
…testing an in-house delivery service
 OTHER FOOD SPECIALISTS
UK: Greggs reports strong Q3 sales
UK: Hotel Chocolat profits up 13%
NEWS ANALYSIS – CLOTHING AND FOOTWEAR
UK: Bonmarché warns full-year profits will be below expectations
UK: British tailoring house Lutwyche opens first pop-up
UK: Fat Face CEO to step down
UK: French Connection
…confirms company could be sold
…report 2.4% drop in revenue
UK: H&M enjoys sales boost in third quarter
UK: Matalan outperforms rivals
UK: Moss Bros Group report 3.3% fall in total group revenue
UK: Mulberry opens new Regent Street flagship
UK: Next full price sales up 4.5% in first half
UK: Orla Kiely ceases trading
UK: Primark
…boosts revenue despite a drop in like-for-like store sales
…extends sustainable cotton sourcing programme to Pakistan
UK: Quiz issues profit warning
UK: River Island
…opening new full-sized store at The Grafton, Cambridge
…reports decline in annual sales and profit
UK: Superdry appoints chief product officer and plans launch of new fashion range
UK: Sweaty Betty posts jump in profits and sales
UK: Ted Baker
…sales up 3.5%
…signs deal with Timex for a new watch collection
UK: TK Maxx FY sales increase 11%
UK: Office CEO retires after 15 years
NEWS ANALYSIS – MIXED GOODS 
UK: Poundland
…to open stores in 20 former Poundworld locations
…intellectual property put up for sale
UK: Wilko swings to red
NEWS ANALYSIS – MULTI-SECTOR
UK: M&S
…appoints new leadership team for food business
…rolls out new checkout-free payment service
…Holly Willoughby unveiled as new face of M&S fashion campaign
 DEPARTMENT STORES
UK: Debenhams
…could launch CVA as it calls in KPMG
…director of merchandising exits
…wants to bring fun back to shopping
UK: Harvey Nichols rolling out shoppable video screens in-store
UK: House of Fraser
…three stores to close
…in-house brands to be scrapped from House of Fraser
UK: John Lewis
…flagship store to see business rates tax to rise 57%
…may take £50 million hit to profits after cutting prices this summer
…reports a 99% drop in half year profits
…collaborating with CupClub to reduce plastic waste
NEWS ANALYSIS – HOUSEHOLD GOODS
 DIY RETAILING
UK: 200 management roles cut in B&Q restructure
UK: Kingfisher reports drop in interim profits
UK: Topps Tiles lifts profit forecast following strong fourth-quarter
UK: Wesfarmer’s former bosses received £760,000 in termination payments despite disastrous takeover
NEWS ANALYSIS – OTHER RETAIL
 MUSIC AND VIDEO GOODS RETAILING
UK: HMV reports falling sales and profits
 CARPET RETAILING
UK: Emma Mattress partners up with Carpetright
 FURNITURE RETAILING
UK: DFS profits hit by summer heatwave
UK: Dunelm reports 6.7% fall in full-year profits
UK: Habitat opens first new flagship in 10 years
UK: Harveys launches first ever celebrity partnership with Louise Redknapp
UK: ScS Group revenue up £4.3 million
 HOMEWARES RETAILING
UK: Cath Kidston reviewing store locations to increase footfall
NEWS ANALYSIS – ONLINE
UK: Boohoo
…lifts forecast as sales beat expectations
…poaches Primark executive John Lyttle
UK: Made.com reports a 40% increase in revenue
UK: Ocado
…adds ‘low plastic’ and ‘recyclable’ categories online
…revenue up 11.5% for Q3
UK: Sosandar expects to report 407% increase in half year revenue
 BOOK AND STATIONERY RETAILING
UK: Card Factory profits rise despite challenging footfall
UK: Paperchase under pressure as main credit insurer reduces cover
UK: Office Outlet’s CVA is approved
UK: Waterstones buys rival bookstore Foyles
 SPORTS AND LEISURE GOODS RETAILING
UK: Chairman of Sports Direct Keith Hellawell is to step down
UK: Evans Cycles
…seeks £10m in urgent funding from lenders
…seeks buyer after failing to launch rescue bid
…Halfords reportedly makes a bid to buy Evans
UK: JD Sports
…plans to take gym chain nationwide
…pre-tax profits up 19% following record results
UK: Nike revenues top predictions
 GARDEN CENTRES
UK: Wyevale sells four more garden centres
 TOYS AND GAMES RETAILING
UK: The Entertainer reports 38% profit uplift
 SHOPPING CENTRES
UK: Icon Outlet at The 02 announces launch date
 MISCELLANEOUS SPECIALIST RETAILING
UK: Pets at Home Group reports 2.7% like-for-like growth
NEWS ANALYSIS – ECONOMY
UK: August retail sales up by 4.9%
UK: BRC-Nielsen Shop Price Index reports second month of price inflation
UK: Retail sales down 0.2% in September