Investors in Scottish fashion chain Quiz will be hoping strong sales momentum has continued when it joins a flurry of retailers including bellwether Marks & Spencer (M&S) in revealing how it fared over the key Christmas trading period.
A strong showing from Next and a profit warning from struggling Debenhams last week have so far given analysts little direction over how the period as a whole has panned out for the sector.
Glasgow-based Quiz, which in July became one of only a handful of Scottish firms to float in recent years, reported in November that sales were running at almost a third higher than the previous year with online investment in particular paying off with a 204.6 per cent rise in sales in the first half.
But Marks & Spencer is expected to record another decline at its troubled womenswear division. Broker Numis predicts that clothing and home sales fell by around 1 per cent in the festive third quarter, which it said will “clearly be influenced by the level of tactical promotional activity”.
The retailer is also coming up against a much tougher comparison from a year earlier, when clothing sales rose by an impressive 2.3 per cent.
Analyst Andrew Wade said: “October marked a particularly poor start to the quarter for the clothing retailers, and the early signs are that the Christmas run-in has been mixed.
“We continue to believe that M&S’s clothing and home division will take longer, and be more costly, to turn around than expected, and are concerned about the ‘repositioning’ now required in the food business.”
Numis is also forecasting that food sales will disappoint once again after a shock admission at the group’s half-year results that it needed to review prices and ranges. It believes sales across its food halls – once the group’s star performer – will come in broadly flat once more after falling 0.1 per cent in the second quarter.
George Salmon of Hargreaves Lansdown said that with inflation outstripping wage growth and high street sales struggling, the going has been tough for the UK’s retailers recently. M&S has felt the heat, and like-for-like sales have been consistently negative since 2011.
“However, Next CEO Simon Wolfson wove threads of optimism into the retailer’s outlook statement, saying he’s hopeful some of the headwinds facing the sector will ease in the coming year,” said Salmon.
“A cold snap in December should also have helped to provide some ballast to the Christmas trading period as coats and jumpers were in demand. Investors will be hoping M&S made the most of the cold weather.”
Other retailers reporting this week include AO World, Morrisons, Sainsbury’s, Ted Baker and John Lewis.