B&M and The Works hit by tough Christmas trading
The discount retailer B&M cut its profit forecast, while the value books and crafts chain The Works reported a fall in sales, highlighting a difficult Christmas trading period for British stores,B&M’s UK sales fell by 0,6% on a like-for-like basis in its third quarter to 27 December, though it said sales improved in December after it reduced prices,The Works reported a 4,2% fall in sales over the Christmas quarter, after online sales slumped by half due to problems with a new delivery provider.
Although shop sales rose 1.2% like for like over the 11 weeks to last Sunday, shares in the Aim-listed company plummeted by 20% in morning trading, before recovering to 14% down.Retailers across the UK experienced mixed fortunes during the festive period, the most important time of the year for many.Even those that performed relatively well have warned that UK consumers were struggling with higher unemployment and rising prices.The Works said it was “disappointed” by the delivery problems, but added that it was also suffering from “subdued consumer confidence”.
“We have felt the impact of a challenging consumer backdrop,” said its chief executive, Gavin Peck,“However, we continued to see a positive response to our excellent value and new products over the festive period,”B&M’s weak Christmas trading follows a turbulent period for the retailer, which has stores across the UK and the rest of Europe,It has been attempting to “reset” the business since ousting its finance chief in October, after an error led to two profit warnings in two weeks,The FTSE 250 company said full-year earnings would take a hit of up to £45m, with profits expected to be between £440m and £475m, down from previous guidance of £470m to £520m.
B&M’s chief executive, Tjeerd Jegen, has brought in a “back to basics” strategy aimed at reducing the number of products sold.He said the UK business would achieve renewed sales growth over the next 12-18 months.Shares in B&M fell 4% in early trading on Thursday, before recovering to be down 0.3%, amid a broader relief rally after Donald Trump dropped his threat to impose fresh tariffs on European countries.Elsewhere, the fashion retailer Primark said like-for-like sales fell in the Christmas quarter, though revenues rose 1.
5% on a constant currency basis to £3,5bn owing to price inflation,The chain’s FTSE 100 owner, Associated British Foods (ABF), surprised the market this month with a profit warning after a decline in sales driven by a poor performance in mainland Europe,The overall revenue increase in Primark was not enough to offset sales declines of 6,9% and 4.
1% at ABF’s sugar and agriculture businesses, leaving group sales for the quarter down 0,9% to £6,8bn,By contrast, the DIY retailer Wickes had a stronger period, reporting revenues of £788m in the six months to 27 December, up 6,3% year on year after higher sales.
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