Retail menu could do without turkeys

The first signs of how Britain’s listed retailers fared over the crucial Christmas trading season will emerge this week when Next updates the City on its performance.

After a difficult year for the high street, which saw the likes of Comet, JJB Sports and Peacocks call in the administrators, the British Retail Consortium is predicting
little or no growth in total festive spending once inflation is taken into account.

However, perennial outperformer John Lewis has
already unveiled sales of £157.8 million for the week to 22 December, an increase of 26.5 per cent compared with the same period last year, while the employee-owned department store chain said online sales were up 40 per cent on Christmas Day itself.

Next, the UK’s second-largest clothing retailer, is due to deliver a fourth-quarter trading update on Thursday, and Peel Hunt analyst John Stevenson is forecasting full-year, pre-tax profits towards the upper end of the £590m-to-£620m range set by the chain in October.

The Christmas sales reporting season kicks off in earnest next week, with updates from Debenhams, Mothercare and Marks & Spencer, along with supermarket groups Morrisons, Sainsbury’s and Tesco.

With the London Stock Exchange closing this afternoon and all day tomorrow, attention will be focused towards the end of the week as a raft of key purchasing managers’ surveys is published.

Howard Archer, chief UK and European economist at IHS Global Insight, predicts that figures on Friday will show the crucial services sector will have seen a marginal improvement in activity this month, having fallen to a 23-month low in November, but a “modest contraction” in the construction sector will be revealed on Thursday.

He said: “With the very wet weather likely to have hit construction output in December, we expect the purchasing managers’ business activity index to have fallen back to a four-month low of 49 in December from 49.3 in November and 50.9 in October. This would take the index modestly further below the critical 50 level that is meant to indicate unchanged activity.”

The manufacturing purchasing managers’ survey, due on Wednesday, is expected to show continued improvement in activity, albeit still below the 50 level.