UK Retail Briefing - June 2011

ANALYST COMMENT
Argos – what’s gone wrong?
The performance
Figure 1: Argos and its key retail sectors performance, 2009-11
Figure 2: Argos sales mix, 2009-10
What has gone wrong?
Dixons – a revitalised business fighting back
Tesco Direct – taking a leaf out of Argos’ Book
A dull shopping experience
Where next?
HEADLINES FOR THE MONTH
Grocers
Food and drink specialists
Clothing retailers
Footwear retailing
Multi-sector retailing
Miscellaneous specialists
Mixed goods retailers
Department stores
DIY retailing
Electricals retailing
Home shopping
Health and beauty retailing
Books and stationery
Sports and leisure goods retailing
Jewellers
Toys and games retailers
RETAIL SALES – BACKGROUND AND OUTLOOK
Key points
Retail sales trends
Figure 3: Retail sales trends, 2010-11
So what is really going on?
BRC
Figure 4: UK retail sales y/y growth, BRC vs ONS, 2010-11
John Lewis
Figure 5: John Lewis: Year-on-year growth, 2010-11
Inflation and wages
Figure 6: RPI vs Average weekly earnings growth, 2005-11
Inflation remains uncomfortably high
Figure 7: Annual percentage change in the Consumer Price Index for selected product groups, 2010-11
Looking forward
SECTOR ANALYSIS – MISCELLANEOUS NON-FOOD SPECIALISTS
 SECTOR RELATIVES
Figure 8: Miscellaneous specialists’ sales as % of all retail sales, 2006-10
 RETAIL SALES DATA
Figure 9: Miscellaneous specialists’ retail sales, current prices, 2006-10
Figure 10: Miscellaneous specialists’ retail sales, May 2010-April 2011
 CONSUMER PRICES INFLATION
Figure 11: Consumer prices inflation in selected categories, June 2010-May 2011
Figure 12: Consumer prices inflation in selected categories, June 2010-May 2011
 CONSUMER EXPENDITURE
Figure 13: UK: Consumer spending, selected categories, 2006-10
 LEADING PLAYERS
Books/news
Figure 14: UK: Leading book and news retailers, 2009/10
Health and beauty
Figure 15: UK: Leading health & beauty retailers, 2009/10
Other specialists
Figure 16: UK: Leading other specialist retailers, 2009/10
NEWS ANALYSIS
 GROCERS
Asda
…considers bid for Iceland
…makes £27m food quality investment
…opens converted Netto stores
…reports flat like-for-likes
…to open George clothing stores in Middle East
Asda Income Tracker: Families £13 worse off
Co-op
…members give £3m to charity
…relaunches Truly Irresistible in sales push
Haldanes files for administration
Heron Food sales rise but profits fall
Iceland Foods
…goes on sale, with bids expected to reach £2bn
…profits rise 20%
Morrisons
…buys wholesale florist
…prepares bid for Iceland
…saves up promotions for shoppers' payday
Sainsbury's
…expands Click & Collect network
…looking to attain growth 'beyond food'
…profits up 9%
…Shapland leaves
Tesco
…appoints digital and marketing officer
…expands click-and-collect service
…Japan boss takes UK role
…looks to entice fashion brands
…to launch new brands
…trials in-store 'sat-nav' system
Waitrose
…to launch healthy range
…to launch high street cafe
 FOOD SPECIALISTS
Greggs sees continued total sales growth
 CLOTHING RETAILING
American Eagle circles London for first UK stores
Ann Summers to re-launch sex toys as part of re-branding strategy
Arcadia
…marketing boss joins M&S
…Green to sell Bhs stores to Primark
Aurora to extend 90-minute delivery option outside M25
Bravissimo profits hit by Pepperberry
Burberry
…expects 40% profit rise
…focuses on flagships as profits rise
French Connection confident it will hit yearly targets
George at Asda turns 21 and sparks new plans
H&M
…sales rise with warm weather
…to open first UK concession in Selfridges
Hobbs to launch contemporary sub-brand
Jane Norman
…boss exits
…up for sale
Kookai sales fall after repositioning
Life & Style on brink of administration
Mango changes logo to appeal to mature customers
Moss Bros reports like-for-likes up 8.2%
New Look profits fall sharply
Peacocks appoints Allan Leighton
Phase Eight reports 42% rise in pre-tax profits
SuperGroup
…acquires Austin Reed Regent Street store
…growth slows in Q4
TK Maxx slows expansion to cope with tougher trading
Topshop launches 'secret' in-store pop-up shop
 FOOTWEAR RETAILING
Dune relaunches website in bid for 50% growth
Jimmy Choo sold for £50m
Kurt Geiger
…launches discount website
…sold to Jones Group for £215m
Shoe Zone profits fall after store investment
 MULTI-SECTOR RETAILING
HMV
…close to securing £210m refinancing deal
…receives £43m cash bid for Waterstone's
…sells Waterstone's to Russian billionaire
Argos sales down, but Homebase steady
 MISCELLANEOUS SPECIALISTS
SCS to open carpet department in stores
Albermarle & Bond full year trading to be at top end of expectations
Halfords
…Autocentres reports improved sales
…profits up 7.2% despite tough retail sales
…trials smaller high street bike shops
Mothercare to close outlets as profits slump
 MIXED GOODS RETAILERS
B&M Bargains
…acquires 11 Focus stores following Focus' collapse
…reports strong year
Marks & Spencer
…bolsters food division team
…chief considers moving company upmarket
…sees profits and market share rise
99p Stores sees profits rise amid international plans
 DEPARTMENT STORES
HoF and Debenhams kick off summer sales early
Debenhams’ suppliers compete in auction-style bidding war
Harrods launches iPhone app
Harvey Nichols owner eyes Aurum
House of Fraser
…closes £250 bond issue
…reports strong full year profits
…to launch Portas collection
John Lewis
…confirms commitment to NKU
…sales down
Laura Ashley like-for-likes down
 DIY RETAILING
B&Q opens nine new You Can Do It Centres
Focus DIY
…business receiving "fantastic level of interest"
…stores acquired by Wickes and B&M Bargains revealed
…to close 120 stores
Kingfisher attributes strong first quarter to good weather
Topps Tiles reports flat profits and sales
Wickes acquires 13 Focus stores for £8.4m
 ELECTRICAL RETAILING
Comet
…like-for-like sales fall 15.2%
… disposal rumoured
…‘We’re not closing down’
Dixons
…agrees £59m sale and leaseback deal
…teams up with big brands for service push
…to drive profit through its Knowhow service division
…UK like-for-likes fall
Everything Everywhere opens 30 own name stores
Jessops opens 2nd Centre of Excellence store
Maplin sees three directors leave
 HOME SHOPPING
The Hut acquires Myprotein.com for £58m
Asos profits up 41%
Brand Alley seeks £87m to fund growth
Findel profits fall as turnaround begins
My-Wardrobe.com like-for-like sales rise 96%
N Brown reports full year profits rise 5.5%
Ocado sales growth slows but first half EBITDA up
 HEALTH AND BEAUTY RETAILING
Alliance Boots sees profits rise
Lloyds Pharmacy launches new website
 BOOK AND STATIONERY RETAILING
Clinton Cards reports fall in like-for-like sales
HobbyCraft unveils new store concept
Staples to roll out in-store entrepreneurial courses
 SPORTS AND LEISURE GOODS RETAILING
American Golf sees sales rise
Go Outdoors secures £30m credit facility to fund expansion
JD Sports like-for-likes fall, but in line with expectations
JJB warns turnaround could take five year as losses triple
 JEWELLERS
Signet
…considers sale of UK arm
…insists it will continue to invest in UK
…UK like-for-likes remain flat
 TOYS AND GAMES RETAILING
Disney Store makes sharp cut in losses
Early Learning Centre launches new mobile website
 ECONOMY
BRC
…says UK consumers lack optimism
…Like-for-like sales fall 2.1% in May
…responsible retailing guide for kisdwear sees retailers sign up
British Land to begin new developments
Capital Shopping Centres plans expansion as footfall grows
CPI annual inflation rise to highest level in 2.5 years
Food inflation at highest level in two years
Hard discounters and Waitrose post strong growth
Like-for-like sales rise 5.2% in April
Retail sales rise 6.2% in April
Suit prices to rise by 10% as wool prices reach record high
Westfield London sales grow 19.8% in Q1