The UKs physical retail sector is in a critical state, we know that. Weve had crises at House of Fraser (since snapped up by Sports Direct International), Debenhams, and more recently Superdry. Now our retail fears have apparently been confirmed as the first figures from the Boxing Day sales are in.
Retail analystSpringboard has reported that footfall across the nations stores at the sales had fallen 3.1% by 4pm on Boxing Day, marking the third year in a row of declining volumes. Thats not the full day, of course, and it doesnt include online sales, but with sales discounts being hiked increasingly further year-on-year, it doesnt look like good news for the shops.
Online too
Though we dont yet have any online sales figures, that sector of the retail business is not immune from the tightening of consumers belts, as the slump at ASOS has shown. ASOS, a pioneer of online fashion sales (and still a great growth prospect in many investors eyes) has seen its share price fall 45% since the release of a profit warning on 17 December and the price is down 67% since the start of 2018.
But I dont actually see Boxing Day sales weakness as such bad news, and I think 2019 could be better than expected, for a couple of reasons.
Changing habits
One is that Boxing Day is becoming less important as a shopping day, with attempts to part buyers from their cash starting earlier in the year these days. Its surely not mere chance that the decline in Boxing Day sales has been coincident with the UKs adoption of the US Black Friday tradition.
The other, as already hinted, is the increasing move to online sales. According to Barclaycard, almost 70% of people it surveyed who intended to shop in the Boxing Day sales planned to do so online, from the warm comfort of their own homes rather than trudging round the cold outdoors.
Some good news
And even for actual bricks and mortar shops, the news isnt all bad. London often leads the way with retail trends, and West End shops were apparently reporting a 15% rise in footfall compared to Boxing Day 2017. Admittedly, Oxford Street might seem like a more tempting prospect than many provincial town centres, and some discounts were apparently very high this year. But I think retail investors should still take cheer from it.
How has the market reacted to these first snippets of information on the post-Christmas retail scene? Not with horror.
Dont panic
Shares in Marks & Spencerstarted a shade under1% up as the market opened after its Christmas break, so theres no obvious panic fallout there from these early Boxing Day results.Nextshares opened with a 1.5% gain, so its perhaps attracting a shade more optimism and that wouldnt surprise me, as its always looked like a better investment to me.
Looking to the big two in online fashion sales, ASOS shares opened up 1.1%, beaten by Boohoo with a gain of 1.8%.In fact, other than a couple of red figures, the retail stocks picture is mostly coloured green as I write these words on the morning of 27 December.
Early gains are mostly ahead of the FTSE 100 too, so I dont see any need for post-Christmas retail panic.
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