The avoidance of a Christmas disaster was enough to send shares in retailers Debenhams and Next soaring yesterday.
The avoidance of a Christmas disaster was enough to send shares in retailers Debenhams and Next soaring yesterday.
Debenhams soared more than 30% at one point before closing 20.2% up at 34.25p up and those of Next gained 12.5% over the day to close at 1227p after they matched analysts' expectations for festive sales and did not issue the profit warnings investors had feared.
Debenhams, the UK's second-largest department store chain behind employee-owned John Lewis, reported a typical store saw sales 3.5% down in the 18 weeks to January 3, at the upper end of analysts' expectations.
Next, the UK's second- biggest clothing retailer behind M&S, said like-for-like sales at its stores fell 7% in the 21 weeks to December 24.
Analysts reckon Debenhams has been taking sales from Marks & Spencer, which provides figures tomorrow when it is expected to announce the axing of 1000 jobs, some 2% of its workforce.
Even so M&S shares rose 8.75p, or 3.8%, yesterday to 238.75p, on the back of good news from its rivals as well as data from market researcher Experian that showed shopper numbers were 11.6% up in the week to January 4 compared to the same week 12 months ago.
Debenhams' numbers are particularly important because the first half of its financial year delivers around 70% of annual profits.
Like-for-like sales growth in the last 12 weeks improved from -4.2% to -3.3%. It also reported that margins are flat, cheering those who worried that extensive price cuts even in advance of Christmas would eat into profits.
Debenhams announced that profit before tax is ahead of last year, thanks in large part to increasing total sales, up 0.6%, as well as cost and stock control.
The company reported that its strongest selling lines in its Edinburgh store included Chanel fragrances and scarves and gloves while in Glasgow shoppers went for multi-packs of socks and remote control helicopters.
The company said net debt is "significantly" lower than last year.
Chief executive Rob Templeman said the company had the £100m it needed to make a repayment on its close to £1bn of debt in the Spring and had not "pushed any buttons" on a fundraising to reduce it further.
At Next, one of the few retailers to resist pre-Christmas sales, like-for-like sales were down 7% at the bottom end of analysts' expectations.
But the company won plaudits for its cost management with the firm having 8% less stock than normal going into its sale period. It said it was on course to meet analysts profit expectations for full- year profit forecasts to the end of January which are in the £415m to £435m range.
But the firm was cautious on the coming year, telling investors it expects like-for-like sales to continue to fall. It also reiterated its warning that it is facing higher costs for its autumn and winter lines for next year thanks to the falling pound which could eat at its margins.
Richard Hunter of Hargreaves Lansdown said: "The Next strategy of refusing to join the pre-Christmas sales bandwagon was not a complete success, although the drop of 7% in like-for-like sales had been largely anticipated.
"Trading at the online directory seems to have held up well, whilst the majority of the summer stock had already been purchased prior to the recent weakness of sterling.
"Nonetheless, whilst this should cushion Next in the first half, any further weakness (along with a cautious management outlook) could result in a more challenging end to the year."
