Supermarkets are expected to report a solid set of Christmas sales, beating off some of the misery that appears to surround other high-street retailers.
Marks & Spencer is expected to spark a media frenzy of retail doom and gloom on Wednesday, by unveiling its worst Christmas sales for two years, and a drop in like-for-like sales of about two per cent in the third quarter, to December 29.
Seen by many analysts as a reliable benchmark of high-street behaviour, M&S may well unveil a fall in like-for-like sales for the first time in nine quarters. It had been forecast to deliver a like-for-like rise and failure to do so will back up City fears that the market has gone into recession since the last credit crunch.
Experts are now doubting the retailer’s ability to revisit the predicted £1 billion profit mark, last achieved a decade ago. "It might be touch and go whether they pass the £1bn barrier after all," said Nick Bubb, retail analyst at Pali International.
Sainsbury's could bring some respite, however, as analysts expect the food sector to have avoided some of the relative carnage wreaked elsewhere. An analyst at Seymour Pierce has predicted a "pretty solid Christmas all in all" for the big grocers.
Waitrose heralded this likelihood, with reports of a 28.5 per cent increase in profits in Christmas week, to £79.2 million. Sainsbury's is unlikely to report that kind of growth, but the City expects it to report a satisfactory 3.6 per cent rise in like-for-like sales, when it delivers its third-quarter trading update on Thursday.
However, Greg Lawless, retail analyst for Blue Oar Securities, told the Telegraph that Sainsbury's is struggling against the tide: “The alarm bells are ringing. Our sources suggest that Sainsbury’s has underperformed the market this Christmas and has missed internal and profit targets. Morrisons was the winner. We believe that Morrisons is winning customers from Sainsbury’s, particularly in the South,” he said.
Kevin Hawkins, director-general of the British Retail Consortium, also said last week: “There is speculation that Sainsbury’s is behind the pack and that is a possibility.”
Both Morrisons and Tesco are also tipped to be among the Christmas winners.
No comments yet