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10 January 2019

A harsh winter for the High Street

A tough year for the High Street has come to a troubled end as retailers saw their worst Christmas for a decade.

The threat of a no-deal Brexit continued to loom large, with the British Retail Consortium saying that this, alongside rising business rates, helped create difficult conditions for retailers. This, added to cash-strapped consumers choosing to cut back on festive spending last year, made for a lean Christmas on the High Street.

Car parts and bicycles seller Halfords has issued a profit warning after like-for-like sales fell 1.7% during the previous quarter. Department store John Lewis has said it will consider suspending its annual bonus to staff after warning that profits will be “substantially lower this year.”

Meanwhile, Marks & Spencer reported a 2.4% fall in like-for-like clothing and home sales during the 13 weeks to 29th December, with food sales down 2.1%. Despite the figures, the High Street stalwart said its turnaround programme was “exactly where (it) needed to be at this stage.”

Roy Kaitcer, Investment Manager, Redmayne Bentley, said: “There have been no real fireworks with Marks & Spencer, with performance in line with expectations and its share price has been steady during this morning’s trading.

“Halfords has reduced profit expectations from around £71m to between £58m and £62m, blaming weak consumer confidence and the mild weather this year for performance during the past quarter.

“In summary, it looks as though 2019 will be similar to last year for the High Street, as shops will continue to face the same issues and tough trading conditions will continue.”

For supermarket Tesco, however, it was a different story. Like-for-like sales were up 2.2% at its UK supermarkets, compared to the same time last year. This was in contrast to Sainsbury’s, which reported a 1.1% fall in sales due to “cautious customer spending” in the previous quarter, compared to the 0.3% fall expected by analysts.

Roy said: “Tesco’s performance has been very strong. This is despite a challenging market, with tough competition from the likes of Aldi and Lidl.

“This is a continuation of the turnaround and the work they have been doing over the last two to three years, selling the right products at the right prices.”

Ends

Notes to Editors
Please note that this article is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.

www.redmayne.co.uk
Redmayne Bentley offers a full range of services, from investment management services suitable for different life stages, through to traditional stockbroking, dealing with advice and tax efficient investments.
Redmayne Bentley’s service has repeatedly been recognised with quality service and administration awards, most recently Best Full Service Stockbroker, Best Stockbroker for Customer Service, Best Self Select ISA and overall Stockbroker of the Year at the Investors Chronicle / Financial Times Investment and Wealth Management Awards 2018.
 
 
 
 
A harsh winter for the High Street

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