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Retail Round-Up January 14th 2011

This week we focus on some recent news local to us and more of a roundup of the post-Christmas retail scene.

Sainsbury’s moves into sandwich shops with Fresh Kitchen debut

Sainsbury’s has made a surprise move into the restaurant game with the launch of Fresh Kitchen, a new canteen-style cafe. The retailer opened up the outlet on London’s Fleet Street on Thursday morning, a stone’s throw from its Holborn head office, just down the road from the FreshMinds office. Fresh Kitchen sells a variety of hot and cold dishes prepared fresh each day and served from behind a long counter by staff wearing fast-food style baseball caps.

Ted Baker retail sales rise 7.6%

Fashion brand Ted Baker posted a 7.6% rise in retail sales over the crucial Christmas period and said pre-tax profit would be in line with expectations for the year to January 29. Ted Baker said trade for the period November 14 to January 8 had started well but that sales were affected by the adverse weather in the lead up to Christmas. However it pointed out that post-Christmas sales had picked up again meaning it would end the year with a clean stock position.

New Look sales plunge at Christmas

Fashion retailer New Look suffered a 9.1% plunge in like-for-likes at its core UK business during the peak Christmas period, when group sales slid UK 3.4%. Snow was estimated to have reduced sales by £15m in the 15 weeks to January 8. New Look’s gross margin took a hit, which the retailer put down to “a higher promotional mix and stock clearance” as well as the bad weather. New Look chief executive Carl McPhail said: “Trading conditions in the UK have continued to be challenging and the adverse weather in December significantly affected footfall and spending patterns.”

John Lewis posts record sales

John Lewis has continued to buck the trend among retailers by posting a record 38.7% increase in sales last week as shoppers rushed to buy electrical goods before the increase in VAT. John Lewis continues to outperform other parts of the retail sector as the retail group says that the increase for the week to 8 January, the biggest recorded in its current financial year, was helped further by an additional bank holiday (3 January) and favourable comparisons to the same period last year, when snow and ice hit trade. Online sales at Johnlewis.com increased 42%, the retailer says, lifted by strong sales of white goods and home furnishing products.

Tesco “hindered” by snow as festive sales falter

Tesco fell short of its supermarket rivals over Christmas, posting a smaller than expected rise in sales over the festive period. The supermarket chain says that sales at UK stores open for more than one year increased by just 0.6% in the six weeks to 8 January despite a Christmas campaign starring Britain’s Got Talent judge Amanda Holden and a major push for its Clubcard loyalty programme. Chief executive Sir Terry Leahy says performance was “hindered” by the “disruptive effects of the severe winter weather conditions” over Christmas. Sales from the supermarket’s online retailer, Tesco Direct increased by 18% over the period. International sales from its 5,000 stores worldwide rose 14.2% over the period

The Co-op blames big freeze for big slump in food sales

The Co-operative Group has reported a 3.2% slump in like-for-like food sales - its second consecutive quarterly decline. The society blamed the bad weather and its ongoing refit of Somerfield stores for the fall, which took place over the 13 weeks to 1 January. However, it said like-for-like food sales in its core convenience estate rose 2% during the period. The most recent drop follows a 1% drop in food sales in the previous three-month period.

Dixons’ Star Wars advertising campaign has failed to lift sales over Christmas as a raft of high street retailers report a difficult trading period.

Dixons has reported falling sales as tough market conditions and snow impacted sales. Dixons Retail, which owns PC World, Curry’s and Dixons.co.uk, reported a 2% fall in sales at stores open for more than a year for the 12 weeks to 8 January. The chain says its UK operations “performed well” despite the bad weather which hindered shoppers getting to its out of town stores.

Argos-owner Home Retail reports better than expected Christmas

Argos-owner Home Retail Group took a sales hit of between £20m and £30m hit over Christmas because of the snow but full-year profits are likely to be better than feared. Like-for-like sales at the flagship Argos chain fell 4.9% in the 18 weeks to January 1, when total sales slipped 3.2% to £1.86bn. However Argos’s performance was better than expected and Home Retail Group’s profits will come in at the mid-point of guidance of between £250m and £275m.

Keri Link is a consultant on the Interim team at FreshMinds