UK Retail Briefing - February 2017

ANALYST COMMENT 
Tesco and Booker to merge
Why?
Increased buying power
What it could mean for the convenience sector
Does it make sense?
RETAIL SALES
Key points
Retail sales
Figure 1: Retail sales trends, 2016/17
Figure 2: UK retail sales y/y growth, BRC vs ONS, Nov 2015-Dec 2016
John Lewis
Figure 3: John Lewis: year-on-year growth, Jan 2015-Feb 2017
Inflation and wages
Figure 4: Real wages growth: Wages growth vs inflation, 2012-17
Inflation
Figure 5: Annual percentage change in the consumer price index for selected product groups, 2016-17
Looking forward
SECTOR FOCUS – CLOTHING
Clothing specialists underperform the retail sector
Figure 6: Annual % change in clothing retail sales, non-seasonally adjusted, by month, Jan 2015-Dec 2016
Consumer spending on clothes is on the rise
Figure 7: Consumer spending on clothing, at current prices, non-seasonally adjusted, Q1 2014-Q3 2016
Christmas trading update
Unexpected change in fortunes for M&S and Next
Specialists benefit from taking a full price stance
Figure 8: Performance of clothing retailers in the UK over the Christmas period, 2016-17
Online-only retailers outperform
Other non-specialists perform well too
Market set to become more challenging in 2017
British sourcing could be an option to explore
HEADLINES FOR THE MONTH
Grocers
Clothing retailers
Department stores
Multi-sector retailing
DIY retailing
Home shopping
Health and beauty retailing
Economy
NEWS ANALYSIS – FOOD AND DRINK
 CONVENIENCE STORES
UK: Spar warns of slowdown in the convenience sector
 GROCERS
UK: Aldi steps up to fifth in the UK grocery market
UK: Iceland reports strong Christmas trading period
UK: Lidl boasts “most successful” Christmas ever
UK: Morrisons
…like-for-likes rise 2.9%
…partners with food sharing app
UK: Sainsbury’s and Argos like-for-likes up 1.0%
UK: Sir Ken Morrison passes away
UK: Supermarkets criticised for wasteful food deals online
UK: Supermarkets partake in project encouraging people to eat less meat
UK: Tesco
…Christmas results lifted by fresh food sales
…introduces PayQwiq payment to entire estate
…launches one-hour delivery in London
…to purchase Booker Group for £3.7bn
UK: The Co-op's Richard Pennycook to stand down
UK: Waitrose reportedly closing up to six stores
 OTHER FOOD AND DRINK SPECIALISTS
UK: Conviviality Retail returns to profit in the second half
UK: Greggs ends the year ahead of expectations
UK: Hotel Chocolat shoppers trade up to higher-priced gifts
UK: Majestic Wine sales up but profits dip
NEWS ANALYSIS – NON-FOOD
 CLOTHING RETAILING
UK: Abercrombie & Fitch creates new store format
UK: Agent Provocateur receives high level of bidder interest
UK: Ann Summers reports surging sales over Christmas
UK: Bhs investigation could last until 2019
UK: Bonmarché sales rise 3.3%
UK: Burberry's UK retail sales surge 40%
UK: Fat Face delivers 7.9% growth in full-price sales
UK: H&M
…expands Weekday fascia
…profits fall amid increased markdown
…sales slow over Christmas
UK: Hobbs sales rise 3.9%
UK: Hugo Boss Q4 revenues decline 3%
UK: Jack Wills reports modest like-for-like growth
UK: Jaeger seeks investors amid strategic turnaround
UK: Jimmy Choo boosted by strong growth in Asia
UK: Joules
…delivers strong Christmas trading results
…performs well over the first half
UK: Matalan full-price sales rise 29.1%, but total sales fall
UK: Moss Bros like-for-likes rise 6.1%
UK: Mothercare UK sales return to growth
UK: New Look
…hires new digital director
…sales and profits drop in Q3
UK: Pep&Co to raise retail prices
UK: Primark sales up driven by increased selling space
UK: Radley delivers rise 9% over Christmas
UK: Reiss turnaround leads to 19.7% sales rise
UK: Snapchat extends retailers' advertising limit
UK: Stradivarius to launch menswear this week
UK: SuperGroup report strong trading result in H1
UK: Ted Baker's retail sales surge 17.9%
UK: Topshop sales fall by around 11% over Christmas
UK: Under Armour looking to purchase French Connection store
 FOOTWEAR RETAILING
UK: Office profits hit by sale to Truworths
UK: Shoe Zone profits rise 1.1%
 MULTI-SECTOR RETAILING
UK: GHM discount stores will become Poundland shops
UK: John Lewis sales rise 4.9% during Christmas trading period
UK: Marks and Spencer clothing sales return to growth
UK: Poundland to cease trading online
 DEPARTMENT STORES
UK: Debenhams
…Christmas performance boosted by beauty and gifting
…to stock modest fashion brand
UK: Fortnum & Mason December results boosted by online
UK: House of Fraser
…reports strong online performance
…to anchor £300m Chester project
UK: John Lewis sales rise 4.9% during Christmas trading period
 DIY RETAILING
UK: Bunnings
…ends zero-hour contracts
…first UK store opens its doors
UK: Screwfix opens 500th store
UK: Topps Tiles reports soft results
 ELECTRICAL RETAILING
France: Fnac gains approval to open on Sundays
Germany: Media-Markt launches technology rental service
UK: BrightHouse to close 28 stores following tough trading
UK: Dixons Carphone reports 8% growth
UK: GAME suffers a decline amid lack of new launches
 CARPET RETAILING
UK: Carpetright returns to quarterly UK growth
 FURNITURE RETAILING
UK: DFS on track with 7% sales growth
UK: Dreams prepares for £400m sale
UK: Habitat trials new standalone format in Leeds
UK: Ikea
…acquires stake in recycling plant
…plans most sustainable store in Greenwich
UK: ScS like-for-like orders rise 2.7%
 HOMEWARES RETAILING
UK: Dunelm
…like-for-like store sales fall 3.1%
…Q2 sales rise 6.6%
UK: Wyevale Gardens launches new website
 HOME SHOPPING
UK: Amazon Go reportedly looking for London store space
UK: AO sales grow in Q3 but warn on future uncertainty
UK: Asos sales surge 36%
UK: Boohoo
…gains approval for Nasty Gal acquisition
…revenues surge 55%
UK: Findel strengthens in the second half
UK: N Brown revenues rise 4.1%
UK: Ocado
…retail sales rise 13.6%
…sells salad from underground London farm
UK: Overseas online interest in British brands on the rise
UK: Shop Direct
…owners reportedly mulling sale or flotation
…9% sales growth driven by Very
UK: Sofa.com sales jump 28% following showroom openings
UK: Visits to UK retail websites reach 4.6 billion in December
UK: Yoox Net-a-Porter IL sales advance 2.3%
 HEALTH AND BEAUTY RETAILING
UK: L'Oreal considering selling The Body Shop
UK: Superdrug sales boosted by make-up trends
 LUXURY GOODS RETAILING
UK: Louis Vuitton global revenues rise by 5%
UK: MatchesFashion boosted my mobile app sales
UK: New West End Company reports strong Chinese New Year sales
 BOOK AND STATIONERY RETAILING
UK: Card Factory ends the year up 0.4% like-for-like
UK: Waterstones generates first pre-tax profit for seven years
UK: WH Smith travel revenues offset declines in high street
 SPORTS AND LEISURE GOODS RETAILING
UK: JD reports a strong Christmas period
 JEWELLERS
UK: Pandora
…revenues rise 21% in 2016
…rolls out digital receipts
UK: Signet
…UK division falls into a like-for-like decline
…restructures to focus on omnichannel
 TOYS AND GAMES RETAILING
UK: Hornby's turnaround plan progresses
UK: The Entertainer
…develops new franchise partner
….Christmas sales climb 13.5%
UK: Toy prices set to rise around 15%
 AUTOMOTIVE RETAILING
UK: Halfords retail sales accelerate in Q3
 PET RETAILING
UK: Pets at Home merchandise sales softer than anticipated
 SHOPPING LOCATIONS
UK: Centre:mk announces £60m investment
UK: High street footfall rises for first time in five years
UK: Intu reports increase in festive footfall
UK: Outlet village operator reports 6.7% sales rise
 ECONOMY
UK: Retail sales growth slows to 0.1% in January
UK: Retail sales rise by 7.1% in December
UK: Retail sales up 1.0% in December