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After undeniably the worst year on record for the retail sector, we are due to kick off 2021 with the traditional Christmas trading update season. Something that will no doubt be watched even more closely than usual this time around.
We can expect to hear from all the big supermarkets. Sainsbury’s (SBRY) is due to give its third quarter update on 13 January, with Tesco (TSCO) following a day later with its Q3 and Christmas trading update. However, Morrisons (MRW) kicks off proceedings with its Christmas trading update due out first on Tuesday 5 January.
Shoppers are expected to have spent close to £12 billion in the supermarkets during December, around £1.5 billion more than last year, according to forecasts from consumer analysis group Kantar.
The most recent grocery market share figures from Kantar show take-home grocery sales rose by 11.3% during the 12 weeks to 29 November 2020, the fastest rate of growth since August. Take-home sales during the past four weeks increased by 13.9%, as eating and drinking out of home was restricted by the English national lockdown.
At Morrisons, increases both in-store and online helped to grow sales by 13.7%, gaining 0.2 percentage points of market share to stand at 10.3%. Sainsbury’s share remained steady at 15.7%, with sales up by 10.8% in the latest 12 weeks. Tesco’s sales rose by 10.4%, and Asda’s by 7.7%.
Ocado’s (OCDO) full year results are out on 9 February.
But, of course, groceries are only one part of the retail picture. You don’t need me to tell you how tough 2020 has been for retailers. They have all struggled to some extent - even supermarkets as they worked out how to handle panic-buying and a switch to online grocery sales.
Next (NXT) will be the first of the non-food retailers to give the market an update on its Christmas trading on Tuesday 5 January. While we wait with bated breath to see whether the beleaguered sector has managed to end its annus horribilis with something to cheer about, it’s fair to say Next has had its own moments of despair in 2020.
In March, as the UK went into its first national lockdown, and all non-essential shops were shuttered, it was forced to close and it took the decision to shut down its online business too. A few weeks later, after working out how to keep warehouse staff safe it reopened online sales of childrenswear and some small home items, only to have to close them down again temporarily because demand outstripped resource. It was soon back up-and-running though and saw sales pick up nicely.
So much so, that at the end of October the fashion chain did something we have not seen very often over the past 12 months in the retail sector - it upgraded its annual profit guidance after sales grew by more than expected in the third quarter.
Full-price sales in the three months through September had risen 2.8%, while total sales, including markdowns, had risen 1.4%. Full year pre-tax profits have now been revised upwards, with the expectation that they will come it at around £365 million, up from the £300 million scenario given in September.
Keep an eye out too for a Q3 trading update from Marks & Spencer (MKS) in the first week of January. That’s scheduled to be released on 8 January. And also for one from John Lewis. The bellwether of ‘middle England’, while not a quoted company, is always keenly watched. The group, which owns Waitrose, should issue a Christmas trading update some time in the first or second week of the new year.
One thing for certain, is that with ongoing uncertainty around the pandemic, and also the realisation of Brexit, the start of 2021 is going to be met with far more trepidation and fear about exactly what the ensuing 12 months will hold, than usual.
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