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Online sales to help offset high street losses
When clothing retailer Next reports its results tomorrow, it will begin the annual spate of reporting that will provide a valuable snapshot of the state of UK retail.Following a sluggish Christmas period on the high street, analysts are predicting that retailers such as Next will report a tough season but that strong internet sales will have helped.
The Telegraph predicts a disappointing start to 2007 for a number of high street stores, including Carphone Warehouse, Debenhams and Next. It also believes that Icelandic investor Baugur could sell its ten per cent stake in Woolworths because of that retailer's particular struggles.
Woolworths issued a profits warning in December that sparked fears for the health of the high street. Other stores that have suffered while internet shopping has flourished include music giant HMV.
In spite of a last-minute rush and a busy sales period, for much of the Christmas period many consumers chose to stay at home and do their shopping with the click of a mouse.
According to the Times, Next is likely to report a fall in underlying shop sales of between five and six per cent in the run-up to Christmas.
However, Investec Securities analyst Mark Charnock said that Next's online sales would help to offset this, saying the store "should continue to benefit from future growth in online shopping".
IMRG chief executive James Roper added that online retailers had experienced better-than-expected sales (despite lofty predictions in the first place), with around 200 million parcels delivered to homes. Particularly strong online performers included Boots, Toys R Us and Littlewoods Shop Direct.
Supermarkets have also greatly benefited from online sales – at Tesco they rose by 30 per cent in the four weeks before Christmas.
Corporate Internet news posted on 03 January 2007
