High street names make heavy weather of Christmas trading

Matalan, the discount retailer, has reported sluggish sales over Christmas and conceded that it will struggle to match its annual target of underlying sales growth of 4 per cent.

Like-for-like sales in the five weeks to 11 January were up by just 1 per cent on the same period last year, compared with analyst hopes of up to 4 per cent. However, gross margins were ahead of last year by a full percentage point. As a result the group is expected to meet analyst profit forecasts.

Paul Mason, chief executive, pointed to total sales growth of 15.6 per cent as an indication that Matalan was still delivering strong sales gains. "We were up against strong sales growth last year when there was a lot of discounting," he said. "In the round I'm pleased with the way we've exited Christmas."

Mr Mason said Matalan would cut prices on key lines to compete with a fresh price assault by Asda's George label.

The shares closed 4.5p lower at 202p.

SHARES IN Woolworths rallied 6 per cent yesterday as investors breathed a sigh of relief after the high street retailer turned in a sound performance over the key Christmas period. Furthermore, Woolworths also predicted a "significant" improvement in profitability for the year, putting its performance "well in line with market expectations". In the six weeks to 11 January, the chain posted a 1.5 per cent jump in like-for-like sales. There had been speculation that Woolworths was left with excess stock over Christmas in areas such as toys and confectionery.

"Despite a tougher retail environment, Christmas trading has been satisfactory and in line with the group's plans," it said. Woolworths' shares closed up 2p at 34.25p.

In the key Christmas period, like-for-like sales at the group's out-of-town Big W stores jumped 6 per cent while sales at its MVC music retail chain rose 6.2 per cent. The chief executive, Trevor Bish-Jones, said: "History says that in a time of recession, Woolworths as a value retailer trades well. We're in good shape to handle a consumer downturn."

THE TOY retailer Hamleys, best known for its flagship store in London's Regent Street, reported strong Christmas trading fuelled by demand for both traditional toys and newer items including a range of James Bond cars and Spider-Man goods.

In the five weeks to 28 December, like-for-like sales under the Hamleys brand rose 6.1 per cent, including a 3.7 per cent jump at the Regent Street store.

Simon Burke, chairman, said the figures showed "the growing strength and resilience" of Hamleys. In the second half, Hamleys said like-for-like sales had grown 11.3 per cent including an 8.3 per cent rise at the Regent Street store.

THE JOHN David Group, which operates the JD Sports and First Sport chains, warned profits for the year would be below expectations after tough Christmas trading, sending its shares crashing 21 per cent.

In the six weeks to 11 January, the JD Sports division produced a like-for-like sales decline of 1.36 per cent while First Sport sales fell 2.03 per cent. Pre-Christmas trading was slower than expected, the group said, but noted that there had been "improved" sales in the post-Christmas sales.

Nevertheless, the gross profit margin over the key Christmas period was at a "lower level than would normally be anticipated", it said, meaning profits for the year to 31 January would be below forecasts. The stock fell 50.5p to close at 191p.

THE CLOTHING retailer Austin Reed warned it would miss profit expectations for the year thanks to "slow sales" over the key Christmas period.

In the five weeks to 11 January, Austin Reed's like-for-like sales fell 2.3 per cent while same store sales in the 22 weeks to 11 January slumped 3.5 per cent.

While it said stock levels remained "under control" and margins were "in line", it warned pre-tax profits for the year to 25 January would be "moderately" below expectations thanks to a tough Christmas. The alert sent shares down 0.5p to finish at 105p.