Retailers reveal whether Christmas brought them cheer

RETAIL remains centre-stage this week as a flurry of companies led by supermarket giant Tesco unveil festive trading updates.

Tesco is expected by analysts at Royal Bank of Scotland to deliver "solid" like-for-like sales growth of 2.5 per cent for the six weeks to 9 January – but well below the performance of rivals Waitrose and Sainsbury.

The City believes Tesco may have suffered from a cocktail of falling food price inflation and a trend for recession-weary shoppers to "trade up" and treat themselves.

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Figures from market research company Nielsen last week suggested it was a robust Christmas across the food retailing sector, revealing 6.7 per cent growth in the four weeks to Boxing Day, rising to 8 per cent in the past fortnight.

News from the "fast fashion" sector is due on Thursday when Associated British Foods-owned Primark reports back on Christmas trading.

Recent figures from rival budget retailer New Look bode well for the chain, after the latter reported a 5.9 per cent hike in sales in the three months to 2 January.

Primark's parent whetted investor appetites with a bullish update last month. Primark grew sales by 20 per cent to 2.3 billion in the last financial year, up 7 per cent on a like-for-like basis as it shrugged off tough consumer conditions.

Its first quarter figures will be the first for Primark's new chief executive Paul Marchant, who was promoted to replace founder Arthur Ryan when he stepped down from the day-to-day running of the group to become chairman.

Trading updates from Game Group and HMV tomorrow and Thursday respectively will reveal how consumer demand for home entertainment products shaped up at Christmas.

Both groups stand to benefit from the gap on the high street left by failed retailers Zavvi and Woolworths.

HMV revealed in half-year figures out last month that it was being dragged lower by struggling book chain Waterstone's, which saw like-for-like sales slide 5.1 per cent in the 26 weeks to 26 October.

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Analysts at Killik & Co are pencilling in low single-digit like-for-like sales growth at HMV in the UK over the period. Trading at Waterstone's may have improved to low single-digit declines, but was "dependent on the impact of the liquidation of Borders in the UK", Killik added.

The market will also be looking for signs of improved trading over the all-important trading period from video games and consoles retailer Game Group, with the festive season accounting for about 25 per cent of its sales.

The chain's recent third quarter trading update was badly received, as it revealed price cuts by supermarket rivals had hit pre-Christmas sales figures.

Despite record demand for blockbuster releases Call of Duty: Modern Warfare 2 and Fifa 10, Game said other titles had not done so well and like-for-like sales in the 18 weeks to 5 December were down 13.9 per cent.

Nightclub owner Luminar also reports on Thursday. The company spent most of 2009 on the back foot as surging unemployment curbed spending among young clubbers. Luminar – which owns the Oceana and Liquid clubs, and has four outlets in Scotland – said late last month that it was well-prepared for Christmas and New Year trading.

The company had previously weathered the recession relatively well, with young mortgage-free consumers among those still spending during the early stages of the downturn. But with around one in five 18- to 24-year-olds now unemployed, the firm is feeling the pain as admissions plunge.

At the half-year stage, underlying pre-tax profits fell to 4.9m from 8.4m a year earlier. Luminar also faces write-downs on its investments in nightclub and bar operator 3D Entertainment.