Financial News

  • 9 January 2014, 7:20

New Look Christmas Sales Heap Pressure On M&S

The fashion retailer New Look enjoyed positive like-for-like sales during the crucial Christmas trading period, heaping further pressure on Marks & Spencer (M&S), its embattled rival.

Sky News has learnt that New Look, which is the UK's second-largest women's value fashion retailer, recorded same-store sales growth of in the region of 1.5% during the seven weeks leading up to the end of the year.

Significantly, New Look did not discount widely across its product range until after Christmas Day, whereas M&S held a two-day sale on December 21 and 22, during which it offered 30% discounts on most clothing and other general merchandise products.

"There was a clear attempt to protect the margin, so the results will be seen positively," said one insider.

New Look, which is privately-owned, has not yet decided when to release details of its festive trading performance although one insider said that it could be published on Thursday. The company declined to comment.

If it does decide to disclose the details tomorrow, it would accentuate the contrast between its performance and that of M&S, which is predicted by analysts to have seen like-for-like general merchandise sales decline by approximately 1.5% for the 13 weeks to December 28.

Like-for-like sales is a measurement used in the retail sector which strips out the effects of changes to selling space, but does not give an indication of the profitability of sales.

New Look's Christmas trading nevertheless suffered in comparison to last year's numbers, when the chain recorded a 3.7% increase in like-for-like sales for the 14 weeks to December 29.

The company is owned by Apax Partners and Permira, two private equity firms, which are likely to embark on another attempt to sell or float it in the next couple of years.

Trading across the high street was difficult during the festive period, with House of Fraser, the John Lewis Partnership and Next emerging as clear winners so far.

Among the major supermarkets, J Sainsbury said on Wednesday that its like-for-like sales were flat, bucking the expectations of those who had predicted a modest decline.

Thursday will bring the most important series of statements on Christmas trading in the UK retail sector so far, with M&S and Tesco among those delivering updates.

The big losers to date have included Debenhams, which warned on profits last week, while Mothercare saw its shares slump on Wednesday morning after also being forced into a profit warning.

Simon Calver, Mothercare's chief executive, said its UK stores had "suffered similar Christmas trading pressures to those reported elsewhere. Customer service scores continue to improve year on year but weaker footfall and higher promotional activity led to lower sales and margins."

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