As the festive season draws to a close, British discount retailers B&M and The Works have reported weaker sales, highlighting the challenges faced by the industry during a turbulent period.
B&M, the FTSE 250 company, saw its UK like-for-like sales fall by 0.6% in the third quarter to 27 December, though the retailer said sales improved in December after it reduced prices. The discount chain has also cut its profit forecast, with full-year earnings expected to be between £440m and £475m, down from the previous guidance of £470m to £520m.
Tjeerd Jegen, B&M’s chief executive, has implemented a “back to basics” strategy aimed at reducing the number of products sold, in a bid to drive renewed sales growth over the next 12-18 months.
Similarly, The Works, the value books and crafts chain, reported a 4.2% fall in sales over the Christmas quarter. The company attributed the decline to problems with a new delivery provider, which resulted in a 50% slump in online sales. Despite a 1.2% like-for-like increase in store sales over the 11 weeks to last Sunday, the Aim-listed company’s shares plummeted by 20% in morning trading.
Gavin Peck, The Works’ chief executive, acknowledged the impact of “subdued consumer confidence” on the business, despite a “positive response to our excellent value and new products over the festive period.”
The challenges faced by B&M and The Works reflect a broader trend in the retail industry, with consumers struggling with higher unemployment and rising prices. Even those retailers that performed relatively well, such as Primark, have warned of the difficult consumer backdrop.
Primark’s owner, Associated British Foods (ABF), surprised the market with a profit warning after a decline in sales driven by a poor performance in mainland Europe. The fashion retailer’s like-for-like sales fell in the Christmas quarter, although revenue rose 1.5% on a constant currency basis to £3.5bn.
In contrast, the DIY retailer Wickes reported a stronger performance, with revenues of £788m in the six months to 27 December, up 6.3% year-on-year, driven by higher sales.
The mixed fortunes of British retailers during the crucial festive period underscore the challenges facing the industry as it navigates a period of subdued consumer confidence and economic uncertainty.