By Tom Braithwaite and Pakinam Amer
Published: December 28 2008 21:52 | Last updated: December 28 2008 21:52
Shoppers have hit the high street in force in the three days since Christmas, offering some hope to retailers, many of which are struggling to stump up cash for rent bills and debt repayments.
John Lewis recorded its best day’s trading on Saturday as consumers who had avoided spending before the festive period splashed out on discounted items. The first day of the promotion saw sales of £21.3m, an increase of 7 per cent on the same day last year.
“We were thrilled,” said Patrick Lewis, retail operations director at the department store chain. “I think a lot of people had kept a little bit up their sleeve.”
Footfall data from Experian showed a 12.5 per cent increase in the number of shoppers on Boxing day as people embarked on a late spending spree, lured by deep discounts in the post-Christmas sales.
At the Harrods sale on Sunday, Melanie Arunachallam, a 32-year-old accountant, said that she was being “very careful” this year with her money. “I’m thinking a lot,” she said as she stood in the shoes section. “Shoes are my priority but I’m not paying more than £200 for a pair.”
Standing in the crowded store, she said: “It looks like people have been saving for this. I certainly have. I have bought very few things this year before Christmas because I was saving up for [the sales].”
In nearby Kensington, Heather Senior, 58, defined herself as an “impulse buyer”, as she sifted through coats in Marks and Spencer.
Mrs Senior said that in spite of the hype she had been underwhelmed by the level of discounting this year, even in Oxford Street, which she visited “to be part of the atmosphere and to see the decorations”. She said that she finished most of her shopping during the pre-Christmas sales, adding: “Anyway, I’m always cynical about sales.”
The improved mood on the high street – whether or not it can last more than a few days – has come too late for Adams, the children’s wear chain, which has filed a notice to appoint administrators.
PwC is expected to step in this week to try to sell the business as a going concern.
With rent falling due for many stores in the last few days after a disappointing pre-Christmas period, other national chains are expected to follow the likes of Adams, Zavvi and Woolworths in appointing administrators.
Retailers are already privately admitting that the traditional sales period in January is likely to be overshadowed by a raft of profit warnings from publicly listed companies and insolvencies from smaller chains.
Mr Lewis refused to draw too much optimism from one day’s bumper trading. “I would say I’m still cautious about the next six months,” he said.
Adding to the uncertainty are the Icelandic government’s plans for Baugur, the investment vehicle that has stakes in companies from Hamleys to House of Fraser.
However, in contrast to some reports, creditors to Baugur are not in favour of a fire sale of the company’s assets.
Copyright The Financial Times Limited 2008
Link: http://www.ft.com/cms/s/0/bc4c1036-d515-11dd-b967-000077b07658.html
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