Week ahead: First Christmas trading indicators as retailers and pub groups report

A number of big name retailers and pub chains will reveal how they held up over the UK’s austerity Christmas, while easing inflation figures are set to underline declining pressure on for cash-strapped families.

Shoppers are expected to have inflicted more pain on PC World and Currys owner Dixons Retail after they cut back on expensive electrical items over Christmas.

The British Retail Consortium recently reported that sales of big ticket items such as TVs were hard to shift over Christmas although one bright spot was tablet and laptop computers.

Dixons, which has 640 stores in the UK and Ireland, has suffered falls in sales and profits in recent months but has won a bitter price war with rivals after Comet was sold for £2 and BestBuy threw in the towel in the UK.

The City is expecting Dixons to reveal like-for-like sales declines of between 6 per cent to 8 per cent in the three months to the end of December, despite high levels of discounting and a high profile advertising campaign over Christmas featuring Star Wars’ Darth Vader.

This would be about the same level as the 8 per cent falls it suffered in the previous half-year.

However, some analysts believe electrical items may have benefited from slightly less discounting than some of the other sectors, such as clothing, over Christmas.

This is because Kesa Electricals is unlikely to put on a huge number of promotions at Comet before the chain is handed over to new owners. And while Best Buy may have promoted hard to clear stock, with only a handful of stores it is too small to disrupt the overall market.

Group sales are expected to be down between 4 per cent and 6 per cent, as further growth in its Nordic business is offset by declines in southern Europe.

Independent retail analyst Nick Bubb said: “The Christmas trading update from Dixons is likely to be frustratingly mixed again - good in the key Nordics business, not too bad in the UK and very bad in the rest of the group overseas.”

Dixons’ shares have lost two-thirds of their value over the past two years after it shocked markets with a series of profits warnings.

The ongoing squeeze in consumer spending is set to play into the hands of Primark owner Associated British Foods.

The budget retailer, which runs some 150 stores in the UK, reported a 3% increase in like-for-like sales in the year to September 17 and the City expects it to report further growth on Thursday.

Its profit margins have been squeezed over the past year as it absorbed some of the recent hikes in cotton prices but this strategy is thought to have paid off by bagging it a greater share of the clothes market.

Primark’s performance in recent months is understood to have been resilient despite the blizzard of promotions in the clothes sector over Christmas and the mild autumn weather, which hit clothes sales.

Robert Waldschmidt, an analyst at Bank of America Merrill Lynch, expects Primark to continue to gain share in 2012 as consumers trade down.

He predicts that like-for-like sales will rise 2 per cent throughout the year, while opening a further 13 stores at home and overseas will help boost its share of its markets.

The bank has carried out research that shows that Primark is perceived to be the cheapest clothes retailer in the UK, outstripping even the supermarkets. And it is considered to be even cheaper than it was a year ago.

Its research also revealed that price is currently the most important consideration for UK shoppers, which bodes well for the fortunes of Primark.

Lower cotton prices will start to benefit the group from the second quarter of the year and have the potential to boost its margins by one percentage point. But Mr Waldschmidt suspects Primark will pass these on as it looks to gain more market share.

He thinks the strong performance of Primark and its sugar division will see the company’s underlying profits increase 9% to £1.1 billion in the year to September.

Weeks after the number of Burberry’s Facebook friends hit 10 million, the luxury fashion brand is set to reveal that recent sales reflected its growing global popularity.

The number of ‘fans’ of the British label hit the milestone earlier this month, making it the world’s most admired luxury digital brand, far outstripping its nearest rivals Dior or Gucci, which each have less than 6 million followers.

The online feat coincided with the launch of its spring and summer ranges modelled by up-and-coming British actors, Eddie Redmayne - nominated for a Bafta Rising Star award - and Cara Delevingne.

Its new ad campaign, showcasing its trenchcoats and parka jackets, was shot by Mario Testino and directed by Burberry’s creative mastermind Christopher Bailey.

Burberry is set to reveal more impressive sales growth on Tuesday. Julian Easthope, an analyst at Barclays Capital, expects it to report a 10% improvement in like-for-like sales in the final three months of 2011. Overall sales will rise 18% helped by expansion in emerging markets such as China, the Middle East, Latin America, Russia, Turkey and India.

He said: “We expect the buzz being created by the group currently will be reflected in a robust set of third quarter sales figures. We expect a reassuring statement.”

The luxury sector has maintained its recent momentum with the help of strong growth in the US and China, he added. Sales in its European stores, where the economy is weaker, are set to be boosted by affluent tourists visiting from emerging markets.

Burberry has been one of the star’s of the stockmarket since 2008 as the luxury end of the fashion market has been resilient and it has sold more of its wares in emerging overseas economies.

It recently said it would target 25 of the world’s wealthier cities in a bid to allay fears it will be hit by the faltering economy.

Burberry said these key markets, which include London, New York and Beijing, account for more than half of the global luxury fashion trade and benefit from high levels of tourism and well-heeled residents.

The trend for families to shun the kitchen in favour of eating out over the festive period should have benefited Greene King, which caters for a diverse market through its brands Loch Fyne, Hungry Horse and Old English Inns.

Analysts think it will have won business from traditional restaurants as more customers opt to trade down rather than do away with their meal out, which for many Greene King’s customers included Christmas lunch.

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