Not A Merry Christmas For The UK Retailers!

  • Jan 10, 2020 GMT
  • Team Kalkine
Not A Merry Christmas For The UK Retailers!

Just before the start of the festive period, November was reported to be one of the weakest months in terms of sales performance for the retail sector. As per the Office of National Statistics (ONS), retail sales had fallen by 0.6 per cent month on month in November. It was only the household goods segment, which displayed some growth during the period. This was primarily driven by huge wage pay outs as well as an increase in the cost of business. Consumers’ uncertainty around Britain’s exit of the European Union as well as a general election, just prior to the Christmas period, all led to a downfall in the consumer confidence, which also hampered sales during the Christmas period. But it was not only the Christmas sales, the situation remained dire throughout the year, with retail sales falling for the first time in last twenty-four years. Following the slump of the sector during the period, government stated that it would be undertaking steps, including conducting a fundamental review of the interest rates, especially for the purpose of supporting Independent retailers. Let us discuss some of the prominent names who did well and some who could not do so well during the period.

Some top performers over the Christmas period

Aldi

Aldi is a common brand name for two German retail businesses called Aldi Nord and Aldi Sud, involved in the business of grocery and household essential retailing, across various countries in around 11,234 locations. The company is also considered to be the United Kingdom’s fifth largest grocery chain. Aldi performed really well over the Christmas period in United Kingdom, as its sales reached around £1 billion over the month ending on the Christmas eve. This was primarily driven by the company’s alcohol segment as well as the meat products and premium varieties segment. The company displayed a sales growth of 7.9 per cent over the Christmas period, and gained in terms of market share, to hold 8 per cent of the UK’s Retail sector. Though, the poor performance of the overall retail sector meant that this was actually a 10 per cent decline in sales as compared to 2018.

Majestic Wine

Wine and Liquor segment has always been in top demand, especially around the festive period, and this year was no different for Majestic Wine, as the company reported 4.3 per cent sales growth in the last quarter of the year. This was primarily due to the company’s overhaul in its product range, which presented the customers with a larger number of options. However, there could be another reason as well and can be said that it was possible due to the company being sold to a private equity firm, Fortress, for a value of £95 million in the month of December.

Next Plc

Next Plc (LON: NXT) was one of the top performers during the festive period, as the sales for Q4 ended 28th December 2019 were reported at a growth of 5.2 per cent, 1.1 per cent ahead of the company’s internal forecast. The company was an exception to the poor performance of the retail sector during the year, as it reported a full year sales growth of 3.9 per cent as opposed to 2018.

NXT share Price Performance

As on 10th January 2020, at 09:00 A.M Greenwich Mean Time, by the time of writing, Next Plc’s share price was reported to be trading at GBX 6750.00 per share on the LSE, a decline in the value of 0.74 per cent or GBX 50.00 per share, as opposed to the last day’s closing price, which was reported at GBX 6800.00 per share. While writing, the share of Next Plc has been trading 46.99 per cent over the 52-week low share price, that was reportedly GBX 4952.00 per share, reached on January 14, 2019. While writing, the share price has been reported to be 8.26 per cent below the 52-week high price of GBX 7358.00, that the company reported on December 16, 2019. The company’s market capitalisation stood at a value of GBP 9.059 billion. At the time of reporting, the annual dividend yield of the share was 2.43 per cent. The Annual dividend was reported to be at GBX 167.50.

The beta of the share of the company has been reported at 1.05. From this, we can infer that the movement in the value of Next Plc share, is slightly fickle as against the movement of the benchmark index in the last twelve months.

Tesco Plc

Tesco Plc (LON: TSCO) is another strong performer of the Christmas period, as they announced a 0.2 per cent growth in total sales in the United Kingdom as well as the Republic of Ireland during the period. The company also reported the Like for Like sales growth of 0.4 per cent for the Christmas period. This was primarily driven by a good 2.3 per cent growth in the Like for Like sales from the Booker segment.

TSCO share Price Performance

As on 10th January 2020, at 09:05 A.M Greenwich Mean Time, by the time of writing, Tesco Plc’s share price was reported to be trading at GBX 252.72 per share on the LSE, a decline in the value of 0.23 per cent or GBX 0.583 per share, as opposed to the last day’s closing price, which was reported at GBX 253.30 per share. While writing, the share of Tesco Plc has been trading 19.94 per cent over the 52-week low share price, that was reportedly GBX 210.70 per share, reached on August 27, 2019. While reporting, the share price has been reported to be 2.95 per cent below the 52-week high price of GBX 260.40, that the company reported on December 16, 2019. The company’s market capitalisation stood at a value of GBP 24.806 billion. At the time of reporting, the annual dividend yield of the share was 2.69 per cent. The Annual dividend was reported to be at GBX 6.75.

The beta of the share of the company has been reported at 1.02. From this, we can infer that the movement in the value of Tesco Plc share, is slightly fickle as against the movement of the benchmark index in the last twelve months.

Comparative Price Chart of NXT and TSCO

(Source: Thomson Reuters) Daily Chart as on 10-January-20, prior to the closing of the London Stock Exchange

The companies that had fallen out during the period

Marks and Spencer Group Plc

Marks and Spencer Group Plc (LON: MKS) had a poor year as they were downgraded from FTSE 100 to FTSE 250 in the middle of 2019, and they also had a particularly poor Christmas period sales, as the company was in the middle of implementing a transformation strategy. The company reported a 0.7 per cent year on year decline in the total group sales for the third quarter of the year, which was primarily because of a massive slip of around 3.7 per cent in the sales for the clothing and home products segment in the United Kingdom.

MKS share Price Performance

As on 10th January 2020, at 09:10 A.M Greenwich Mean Time, by the time of writing, Marks and Spencer Group Plc’s share price was reported to be trading at GBX 192.34 per share on the LSE, a decline in the value of 1.06 per cent or GBX 2.06 per share, as opposed to the last day’s closing price, which was reported at GBX 194.40 per share. While writing, the share of Marks and Spencer Group Plc has been trading 19.21 per cent over the 52-week low share price, that was reportedly GBX 161.35 per share, reached on October 10, 2019. While writing, the share price has been reported to be 34.32 per cent below the 52-week high price of GBX 292.86, that the company was reported to be trading on February 26, 2019. The company’s market capitalisation stood at a value of GBP 3.790 billion. At the time of reporting, the annual dividend yield of the share was 5.03 per cent. The Annual dividend was reported to be at GBX 11.00.

The beta of the share of the company has been reported at 1.09. From this, we can infer that the movement in the value of Marks and Spencer Group Plc share, is slightly fickle as against the movement of the benchmark index in the last twelve months.

Card Factory Plc

As per the company, the Christmas trading period was extremely challenging, as its trading performance was impacted by the consumer uncertainty around the election as well as Brexit, which cast its shadows on the entire retail sector. The like for like sales for the 11 months ending in December were down by 0.6 per cent, albeit a Group revenue growth of 3.4 per cent was reported during the period, which has bought some optimism for the company for the next year.

CARD share Price Performance

As on 10th January 2020, at 09:15 A.M Greenwich Mean Time, by the time of writing, Card Factory Plc’s share price was reported to be trading at GBX 93.93 per share on the LSE, a decline in the value of 5.79 per cent or GBX 5.77 per share, as opposed to the last day’s closing price, which was reported at GBX 99.70 per share. While writing, the share of Card Factory Plc has been trading 0.09 per cent over the 52-week low share price, that was reportedly GBX 93.85 per share, and was reached on January 10, 2020. While writing, the share price has been reported to be 53.95 per cent below the 52-week high price of GBX 203.96, that was reported on April 30, 2019. The company’s market capitalisation stood at a value of GBP 340.52 million. At the time of reporting, the annual dividend yield of the share was 6.64 per cent. The Annual dividend was reported to be at GBX 9.30.

The beta of the share of the company has been reported at 0.95. From this, we can infer that the movement in the value of Card Factory Plc share, is less fickle as against the movement of the benchmark index in the last twelve months.

Comparative Price Chart of MKS and CARD

(Source: Thomson Reuters) Daily Chart as on 10-January-20, prior to the closing of the London Stock Exchange

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