Scrutineer: Weather eye on retailers

Published on Friday 14 August 2009 21:38

Celtic FC 40.50p unch

DON'T be too surprised if you see John Lewis staff perform a rain dance in store today. The weather plays a pivotal role in the fortunes of the iconic department store chain – and as far as store bosses are concerned, it's a case of the wetter the better.

Unfortunately, last Saturday proved to be something of a scorcher, with the warm weather hitting takings across the business.

The 5.3 per cent year-on-year slide in the week to 8 August ended a three-week run of growth, including a rise of 5.6 per cent in the previous seven days. None of the company's 27 stores managed to increase sales.

A circumspect Andy Street, John Lewis' managing director, admitted that last Saturday's short-lived heatwave "proved more of an attraction to our customers after a few wet weekends".

Well, those are the breaks. Retail's a tough old game at the best of times, and the past year has hardly been a vintage one for this nation of shopkeepers.

The recession has claimed a string of household names, including Woolworths, MFI and former Virgin Megastores business Zavvi. Thousands of jobs have gone and few high streets have escaped unscathed.

Yet those of us with a bit of spare cash keep on spending.

Figures this week from the British Retail Consortium showed that across the retail sector, like-for-like sales in July were 1.8 per cent higher than a year ago. Official data due out next week is expected to reveal a similar pattern of resilience.

A raft of big names from B&Q-owner Kingfisher and fashion chain Next to supermarket giant Morrisons and flooring retailer Carpetright have reported better-than-expected trading in recent weeks.

The performance of employee-owned John Lewis is closely monitored by analysts as an indicator of the wider retail market.

Pali International analyst Nick Bubb reckons the fall in sales across John Lewis's department store business should not mean the end of a more positive trend.

He said: "This dip looks like a blip, and we expect John Lewis to be up again over the next two weeks when the comps (comparative numbers] are soft – everyone was too busy watching Team GB in the Olympics on TV last year to go shopping."

Meanwhile, analysts at brokerage Seymour Pierce have a "buy" rating on Next, and they are also recommending lower value defensives, including Halfords and N Brown.

Investors in retail stocks should avoid hitting the panic button.

A game of two halves

SCOTTISH football's premier league season kicks off today, but results off the pitch are proving just as important as those on it, writes Terry Murden.

The cut in revenue from the hastily renegotiated television deal will cost all clubs dearly – 75 million according to Celtic chairman John Reid, whose statement in the club's latest accounts shows that he's still bitter about the way that an earlier deal with Setanta was given preference over Sky.

Since the dark days of 15 years ago, when Celtic was close to bankruptcy, the club has learned to cut its cloth in what have proved to be lean times for even the big two of the Scottish game. Reid, speaking after the results were published, said he would not allow Celtic to become dependent on anyone else in that way ever again.

But competing against the bigger European teams is becoming an increasingly challenging exercise as the financial divide widens.

No wonder Reid resorts to spitting tacks over missed opportunities on television deals and to calling certain player contracts "onerous".

Of course, the Old Firm's biggest asset is their fan base and that is a revenue stream that never switches off. Even in a tough economic climate Celtic's merchandising revenue for the year reached 17.18m, which was 6.8 per cent up on the previous year. The club now operates 14 stand-alone shops and licences one franchise store.

The board will see some change in the coming season when non-executive director Brian McBride stands down after five years. He will not seek re-election, apparently because of growing commitments to the online retailer Amazon.

It will prompt some speculation about who might replace him. Former Dunfermline Building Society chairman Jim Faulds, a Celtic fanatic, would have fancied it, but the spectacular collapse of Dunfermline will surely have cost him that opportunity.