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Tough times but we'll weather storm say Debenhams and Next
Simon English06.01.09
TWO of Britain's biggest high-street names today revealed just how rocky Christmas has been, with sales slumping as the recession bit hard.
Debenhams and Next admitted that retailers are in the grip of the toughest trading conditions for decades.
But there was fighting talk too, with Next arguing that predictions of a complete high-street wipe-out are exaggerated and Debenhams insisting it will emerge as a winner from the carnage.
Crucially, neither felt the need to alert the City that profits will sink below earlier forecasts, suggesting the worst could be over. And neither company has plans for big job cuts.
Marks & Spencer is refusing to comment on a report that it is about to axe 1,000 staff.
In the 18 weeks to 3 January, Debenhams sales fell 3.5 per cent on the same period a year ago. But it claims to be taking market share from all of the competition, including M&S.
Chief executive Rob Templeman says the London stores performed better than elsewhere, with accessories and beauty products selling particularly well. He says trading conditions will "remain challenging".
Chairman John Lovering said: "Only the best positioned and managed businesses will emerge from the recession in a position to capitalise on the shake-out taking place within our industry. Debenhams has a great franchise."
Debenhams reported a surge in sales of its own designer range - a trend put down to a new type of shopper it called the "recessionista", who opts for equivalents to expensive labels - recording a growth in sales of more than 10 per cent across its Designer at Debenhams range in the past 18 weeks.
Sales at Next - which defied rivals by refusing to slash prices in the run-up to Christmas - fell seven per cent between August and Christmas Eve.
It still expects to make profits for the financial year of around £425 million. Analysts say that its clothing will remain popular as workers try to look smart on a tight budget.
Chief executive Simon Woolfson says 2009 will be tough, with the first half of the year "particularly difficult", but he hit back at doom-mongers. "We would caution against some of the more extreme economic forecasts," he said. "There is some relief in sight for the consumer; food ,fuel and energy prices are set to fall during the year."
Several retailers including music store Zavvi failed to survive Christmas and more will follow. The last of Woolworths' 800 stores closes today, though a director is making a last-ditch bid to save some of the business.
Commercial and marketing director Tony Page claims he can save 125 stores if banks will agree to lend him £35 million but time appears to have run out.
