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Home Retailers get the cold shoulder

RETAIL investors are braced for “Gloomy Thursday” this week when a blizzard of stores will blame the snow for poor performance over Christmas. Argos and Homebase owner Home Retail, Dixons, Halfords and Game Group are all expected to report that snow-bound customers gave them the cold shoulder over the festive period.

The major supermarkets will have usurped Argos for non-food goods during the bad weather, according to Peel Hunt analyst John Stevenson. “A lot of products Argos sell are homogenous, there’s plenty of other retailers you can get them from,” he said.

Car maintenance retailer Halfords was last week softening the market up for weakness in Christmas sales, warned Arden Partners analyst Nick Bubb. “The logic is that many of the stores are out of town and couldn’t be reached because of the snow and ice and that consumers were put off buying children’s bikes, which is a key area.
“We would not be surprised by a 6 per cent like-for-like sales decline in the latest quarter,” he said.

Shopper numbers released last week confirm December was significantly quieter on the high street than last year. The Retail Traffic Index showed footfall was down 7 per cent.
The figures paint a bleak 2011 for under pressure retailers, according to insolvency experts Begbies Traynor, whose alerts system identified 3,000 retailers as in serious danger in December. Begbies director Nick Hood said: “Medium-sized and smaller retailers will inevitably struggle to preserve their margins as value-conscious consumers resist attempts to pass on rising costs.

“Larger retailers have the commercial muscle to protect their profitability but only by grabbing some market share from their smaller competitors.” Supermarkets and department stores are expected to say this week that Christmas trading was robust. Marks & Spencer is expected to report a third-quarter like-for-like sales increase of 2 per cent, according to consensus.
Supermarkets may use the bad weather to vaunt the importance of online shopping, Hargreaves Lansdown broker Keith Bowman said.

“The occasion could also be seized on by Sainsbury’s and Tesco to underscore their growing and strong online sales, a factor possibly helped by the cold December weather, in comparison to Morrisons’ lack of an online presence,” he said.

Source : Emma Vickers -

09 January 2011
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