LONDON – Black Friday discounting and consumers’ hunt for bargains is proving toxic for the big British high-street chains, with both Debenhams and Marks & Spencer reporting sales declines in the pre-Christmas trading period and pointing in particular to a dismal November.
In a trading update Thursday, Debenhams said that in the six weeks to Jan. 5, like-for-like sales were down 3.4 percent. In the 18 weeks prior to that date, they were down 5.7 percent. The company provided percentages only.
Debenhams described the U.K. trading environment as volatile, “with clear evidence that our customers have been seeking out promotions.” As a result, the store said it reinstated “some tactical promotional activity in order to be competitive and manage inventory tightly.” It said the decision to discount will result in some gross margin erosion in the first half.
While the Christmas season started slowly, Debenhams added that group digital sales rose 6 percent, supported by improved mobile conversion and customer experience. Debenhams added that “revitalized product” helped to improve market share in women’s wear.
“We have worked hard to deliver the best possible outcome in very uncertain times for retailers,” said Sergio Bucher, Debenhams’ chief executive officer, adding that the company needs “a strong customer proposition, a strengthened balance sheet and a re-shaped store portfolio. We have a robust plan to deliver this.”
Marks & Spencer saw a 2.7 percent decline in third-quarter revenue to 2.78 billion pounds, with sales in the clothing and home division falling 4.8 percent to 1.1 billion pounds.
M&S said the decline in clothing and home reflected lower footfall to stores, partly as a result of the increasing pace of closures. Online growth was 14 percent, driven by improvements to proposition and operations. It also said that stock into sale was down 25 percent, due to planned reduction in stock levels.
Steve Rowe, chief executive of Marks and Spencer, blamed a combination of factors, including declining consumer confidence, mild weather and Black Friday.
“Widespread discounting by our competitors made November a very challenging trading period,” he said, adding that the store’s 13-week performance was steady with some early encouraging signs.
In the clothing and home division, Rowe said the company is at the early stages of far-reaching changes in range, style, customer focus and channel mix. “Our objective is to reshape our buy, deliver market-leading value and focus on stylish and wearable wardrobe ‘must-haves’ as we grow our business with family-aged customers seeking style, quality and value.”
He said clothing and home online sales performance was strong, with U.K. revenue up 14 percent, supported by an increased focus on digital marketing together with improvements to delivery proposition and operations.
Women’s wear online growth, he added, “significantly outperformed,” fueled by dresses and knitwear, reflecting the store’s “must-haves” offer and social media campaigns.
Christmas trading at the big British high-street chains has been uneven, with Ted Baker reporting a 12.2 percent uptick in retail sales for the five week period from Dec. 2 through Jan. 5. E-commerce sales were up 18.7 percent.
High-street giant Next plc said that full-price sales for the Christmas trading period from Oct. 28 to Dec. 29 were up 1.5 percent on last year.
The retailer said strong sales in the three weeks prior to Christmas along with a good school holiday period in October made up for “disappointing sales in November.”
High-end retailers with smaller store networks have been faring better, with Selfridges reporting an 8 percent uptick in sales in the 24 days before Christmas. Sales at the Oxford Street flagship climbed 10 percent over the period, which the retailer attributed to newness, exclusive product and in-store entertainment.