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UK Retail Briefing - July 2011

ANALYST COMMENT
Second best is not good enough – especially in recession
Failures
TJs
Jane Norman
No-one wants furniture
What else do these businesses have in common?
Second best
Invest or die
HEADLINES FOR THE MONTH
Grocers
Food and drink specialists
Clothing retailers
Footwear retailing
Multi-sector retailing
Miscellaneous specialists
Department stores
Furniture retailing
RETAIL SALES – BACKGROUND AND OUTLOOK
Key points
Retail sales trends
Figure 1: Retail sales trends, 2010-11
June – the indications are poor
Figure 2: UK retail sales y/y growth, BRC vs ONS, 2010-11
John Lewis
Figure 3: John Lewis: Year-on-year growth, 2010-11
Inflation and wages
Figure 4: RPI vs Average weekly earnings growth, 2005-11
Inflation remains uncomfortably high
Figure 5: Annual percentage change in the Consumer Price Index for selected product groups, 2010-11
Looking forward
SECTOR FOCUS – CLOTHING AND FOOTWEAR RETAILERS
 SECTOR RELATIVES
Figure 6: Clothing & footwear specialists’ retail sales as % of all retail sales, 2006-June 2011
Figure 7: Clothing & footwear specialists’ retail sales as % of consumer spending on clothing & footwear, 2006-Q1 2011
 RETAIL SALES DATA
Figure 8: Clothing & footwear specialists’ retail sales, 2006-11
Figure 9: Year-on-year growth in clothing & footwear specialists’ retail sales, Jul 2010-Jun 2011
Figure 10: Clothing & footwear specialists’ retail sales growth in current and constant prices, 2006-Q1 2011
 CONSUMER PRICES INFLATION
Figure 11: Indices of retail prices for clothing & footwear, Jan 2009-Jun 2011
Figure 12: Consumer prices index for clothing & footwear, Jan 2010-Jun 2011
 MINTEL’S TRACKER SURVEY
Figure 13: Mintel Tracker Survey: Agreement with statements on what extra money is spent on, Jul 2010-Jun 2011
 CONSUMER EXPENDITURE
Figure 14: Consumer spending on clothing & footwear, 2006-Q1 2011
 LEADING RETAILERS
Footwear
Figure 15: Leading footwear specialists’ sales, 2009/10-2010/11
Clothing
Figure 16: Leading clothing specialists’ sales, 2009/10-2010/11
NEWS ANALYSIS
 GROCERS
Asda
…achieves £1bn ethical and local produce sales
…COO exits
…former boss sets up investment vehicle
…reports consumers starting to ration
Iceland trials Greggs Foods
Haldanes files for administration
Iceland profits rise 20%
Morrisons
…buys wholesale florist
…to open first c-store chain
Sainsbury's
…reports strong sales in challenging market
…strengthens online team
Tesco
…launches Back to School campaign
…reports strong group sales growth
…signs agreement that signals further expansion into Chinese market
…to add double glazing to portfolio
Waitrose
…targets London for convenience store format
 OFF-LICENCES
Majestic Wines profits up 27%
 OTHER FOOD SPECIALISTS
Holland & Barrett's profits up
Thorntons to cut number of stores
 CLOTHING RETAILING
Abercrombie bid for SuperGroup speculations
Alexon like-for-likes remain flat, leading to new finance options explored
Aquascutum to open stores in Milan and Rome
Aurora management team vie to buy Jane Norman
Ben Sherman seals suit licence deal and invites Nickleson bids
Bonmarché future boss named, if sale goes through
Burberry triggers potential revolt over pay
East pre-tax profits up 9.5%
Forever 21 flagship to open at Lakeside
Hobbs secures £46.5m funding to accelerate expansion
Jacques Vert's pre-tax profits up 3.1%
Jane Norman
…enters new private equity rescue talks
…in administration
Edinburgh Woollen Mill acquires 31 Jane Norman stores but 35 to shut
Life & Style closes 22 stores, axing 300 jobs
Matalan EBITDA falls due to snow in Q4
Missoni to open second UK standalone store
Moss Bros like-for-likes up 13.4% with disposal of Cecil Gee
Mulberry full-year profits rise
Next sells customer service business for £65m
Phase Eight reports 42% rise in pre-tax profits
Polo Ralph Lauren denim line to open franchise stores
SuperGroup reports business 'on track'
Ted Baker sales rise ahead of expectations
Uniqlo sees 31% sales surge
Vera Wang opens shop-in-shop with Browns
 FOOTWEAR RETAILING
Brantano back in black
Schuh sold to US retailer for £125m
 MIXED GOODS RETAILING
99p Stores sees profits rise amid international plans
B&M Bargains reports strong year
 MULTI-SECTOR RETAILING
Marks & Spencer launches earlier summer Sale
 MISCELLANEOUS SPECIALISTS
Cath Kidston opens in St Pancras
Pets at Home profits rise
Halfords trials smaller high street bike shops
Mamas & Papas aims for 30 more UK stores
Carpetright profits fall in face of weak consumer demand
 DEPARTMENT STORES
Beales reports loss
Debenhams
…reports like-for-likes rise
…tables bid for Jane Norman
John Lewis to open home store in Ashford
TJ Hughes
…puts administrators on standby
…in administration
…acquired by GA Europe
 DIY RETAILING
Focus creditors will not be paid
Kingfisher gets go-ahead on Focus stores deal
 ELECTRICAL RETAILING
Best Buy
…may halt UK expansion plans
…reportedly considering Dixons bid
…UK big boxes lose £62m in first year
Comet to close 17 stores
Dixons
…planning second Black store
…sees balance sheet hit
 MUSIC AND VIDEO GOODS RETAILING
Game appoints new boss of UK and northern Europe
HMV
…chiefs outline new vision after bad year
….profits down 61%
 FURNITURE AND FURNISHINGS RETAILING
BrightHouse EBITDA rises
BrightHouse to launch transactional website
Conran and Radice to launch new department store concept
CSL sales up as it plots South East expansion
DFS posts profits rise
Dreams increases market share but profits fall
Home Retail
…in talks to buy Habitat
…confirms Habitat UK deal
Homeform
…unites brands for Sale push
…files notice to appoint administration
…closes Moben, Dolphin and Kitchens Direct
Homebase interested in failed Moben and Dolphin
Sun European acquires parts of Homeform
Magnet reaches out to customers of Moben and Kitchens Direct
Lombok cautious on concession roll-out
Dunelm sees sales and market share rise
 HOME SHOPPING
Amazon to buy The Book Depository
Argos launches TV shopping channel
Asos marketplace to work with global sellers
EBay hires Cocosa marketing director
JML to focus on growth through supply division
My-Wardrobe targets Middle East
N Brown reports like-for-like rise
Ocado posts pre-tax profit and deal with Carrefour
Park Group pre-tax profits rise
Shop Direct hires Very boss
The Hut drafts in IPO advisers
 HEALTH AND BEAUTY RETAILING
Superdrug back in black in 2010
 BOOK AND STATIONERY RETAILING
Foyles to open in Westfield
Waterstone's sold to Mamut
WH Smith sales fall
 SPORTS AND LEISURE GOODS RETAILING
JD Sports acquires Cecil Gee and Sprinter
Pentland Group sales and profits rise
Sports Direct acquires USC and Cruise
 JEWELLERS
Theo Fennell sales rise 15%
 GARDEN CENTRES
Garden Centre Group is up for sale
 ECONOMY
Asda Income Tracker: weekly spending power's largest decline
BRC: Food inflation up 5.7%
Discounters increase market share, while Asda loses out
Inflation unchanged at 4.5% in May
Retail sales values up, but volumes flat

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