Late sales surge lifts retailers

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A late surge in high street spending in the week before Christmas has helped many retailers to finish the festive season with a flourish. But most still expect 1995 to be tough, with the threat of interest-rate rises and pressures on margins seen as the main problems.

Boots led the way yesterday, announcing a sales increase of 6.1 per cent for its retail operations in the quarter ended 31 December. Apart from Childrens World, the out-of-town stores, which saw their year-on-year performance deteriorate, all subsidiaries reported like-for-like increases. Boots the Chemist, the main operating chain, enjoyed sales up 4.1 per cent, with cosmetics and toil-etries doing particularly well.

Boots the Opticians reported sales up 5.6 per cent. The performance was enhanced by placing some shops within or next to branches of Boots the Chemist. Even the DIY divisions such as Do it All, the joint venture with WH Smith, and Fads saw their sales rise in difficult conditions.

Boots' chief executive Sir James Blyth said he was pleased with the results in a fragile retail market. "December more than made up for the extremely sluggish October and November," he said. The figures beat City expectations, though the shares slid 3p to 494p at yesterday's close.

Elsewhere William Morrison, the Bradford-based supermarket group, also reported bullish figures. In a statement covering the five weeks to 1 January, the company said like-for-like sales were up 4.9 per cent. Total supermarket sales were up by 16.8 per cent with new stores boosting the figures.

Other retailers are expected to announce soon that the cold snap in December and strong sales on the final Saturday before Christmas (which fell on Christmas Eve) helped put a gloss on otherwise dull seasonal trading.

Though Marks and Spencer is not due to issue its Christmas trading statement until the end of this month, its December sales are thought to be 14 per cent up on last year. But this includes Sunday trading, which M&S began for the first time this year.

John Lewis, the department store group, is thought to have enjoyed sales up 28 per cent in the final week, and like-for-like sales up 5.5 per cent during the first 21 weeks of the second half. The group said its sales were in line with expectations.

The story at Littlewoods is less rosy. Sales are believed to have been flat for the first two weeks of December with a late surge - up 12 per cent - in the week before Christmas. The performance at BhS, the Storehouse subsidiary, has been similar.

City opinion is divided on the outlook for 1995. Tony Shiret of BZW believes it will prove a hard slog on the high street with the gap widening between the winners and losers. Nick Bubb of Morgan Stanley is more optimistic. "I can see forecasts edging upin some cases," he says.