UK Retail Briefing -November 2007

ANALYST COMMENT – CHRISTMAS 2007
 KEY FINDINGS
THE MONTH IN UK RETAILING
 GROCERS
Asda
…announces Christmas price cuts
…despite profits fall in 2006
…will co-operate with OFT in price-fixing inquiry
…to overhaul teenage-focused George
…and will take on Argos with online offer
Competition Commission publishes grocery inquiry provisional findings
London votes to ban plastic bags
Morrisons LFLs pick up during Q3
Sainsbury’s
…issues deadline; Delta seeks funding
…before bidder quits
…although Tchenguiz revives split plan
…as it posts strong H1 profit
 OFF-LICENCES
Strong H1 results for Majestic
Oddbins losses widen in 2006
 CLOTHING RETAILING
Arcadia records full-year success
Burberry profits up 32% in H1
French Connection LFLs fall 3% in Q3
Little Miss Matched announces UK expansion
LK Bennett owner attempts sale (again)
Peacocks delays potential £800m refinancing
Primark boosts ABF full year profits
Robust Q3 for Ted Baker
USC reveals £8.8m loss
 MIXED GOODS RETAILING
Mothercare
…tests the water in Germany
…and records rise in UK and international sales in H1
Woolworths sees sales rise but retail struggles
 MULTI-SECTOR RETAILING
Ethical retailer Adili announces flotation
Boots ahead of expectations
Home Retail Group reveals interim profit
M&S H1 results, announces international expansion
Next LFLs drop 2.9% in Q3
 DEPARTMENT STORES
House of Fraser profits post Baugur buyout
John Lewis announces expansion
 ELECTRICAL RETAILING
Carphone Warehouse reports strong profits in H1
Kesa sales growth slows in Q3
 FURNITURE RETAILING
Land of Leather records like-for-likes fall
United Carpets upbeat on trading
 DIY RETAILING
Travis Perkins acquires Tile Giant
EXECUTIVE APPOINTMENTS
Blacks Leisure appoints new chief executive
Claire’s appoints new UK MD
Goldsmiths boss to go
HoF appoints chief finance officer
Internaçionale chief quits
Kingfisher
…announces Murphy’s departure
…with B&Q boss favourite for position
La Senza pinches Monsoon’s property director
Further job losses on Littlewoods Shop Direct horizon
Matalan founder quits as chairman
M&M Direct appoints Robinson
Pidgeon promoted to lead QS rebrand
Barel in at Photo-Me
Primark chief denies retirement plans
Sixty Group MD resigns
Tesco loses head of design
Whole Foods Market appoints UK chief
WH Smith attempting to lock in chief executive
PRODUCT DEVELOPMENT – DESSERTS
 ASDA
 MARKS & SPENCER
 MORRISONS
 SAINSBURY’S
 SOMERFIELD
ADVERTISING NEWS
 NEW CAMPAIGNS
Agent Provocateur signs up Mediaplex
Boots rolls out Christmas push
Holland & Barrett launches pyjama ad
Iceland to sponsor I’m A Celebrity
Jessops’ advertising changes direction
John Lewis ramps up advertising for Christmas
Lidl goes healthy, quits tobacco sales in Scotland
Littlewoods unveils latest Trinny & Susannah ad
Morrisons hires Lulu
Oxfam launches Unwrapped campaign
Play increases Christmas adspend
Primark refuses official Facebook presence
Reiss unveils new shopfit
Sainsbury’s in Sports Relief POS push
Tesco
…Direct appoints Brands2Life
…and unveils Spice Girls ad
TK Maxx launches Christmas ads
Woolworths to cut TV spend for Christmas
Zazzi nearing completion of ‘fastest rebrand ever’
 ACCOUNT GAINS/LOSSES
Hammonds appoint Carat to media account
Pets at Home looking for ad agency
RETAIL ADVERTISING REVIEW
 ADVERTISING EXPENDITURE
Figure 1: Total advertising expenditure by all advertisers (£m), Sep 2003-Sep 2007
Figure 2: Total advertising expenditure by all retail advertisers (£m), Sep 2003-Sep 2007
 USE OF MEDIA
Figure 3: Use of media by retail and all advertisers (%), Sep 2003-Sep 2007
Figure 4: Use of media by retail and all advertisers (£m), Sep 2003-Sep 2007
 TOP 25 RETAIL ADVERTISERS
Figure 5: Top 25 retailers by adspend (£), Aug 2007-Sep 2007
Food
Furniture
DIY
Optical retailers
Other
Nielsen Media Research/ Definitions
RETAIL SALES AND INFLATION
 RETAIL SALES
Office for National Statistics
Figure 6: Retail sales trends: Oct 2006-Oct 2007
Figure 7: Non seasonally adjusted % value change on previous year, Oct 2006 – Oct 2007
Figure 8: Seasonally adjusted % volume change on previous year, Oct 2006 – Oct 2007
Significant features of the latest ONS statistics
Confederation of British Industry
British Retail Consortium
 RETAIL PRICE INFLATION TRENDS
Figure 9: Annual percentage change in retail price index for selected product groups: Oct 2006 – Oct 2007
Figure 10: Annual percentage change in retail price index for selected product groups: Oct 2006 – Oct 2007
Retail Prices Index
Consumer Prices Index
British Retail Consortium: Shop Price Index
SECTOR ANALYSIS – NON-FOOD SPECIALISTS
 SALES TRENDS
Figure 11: Non-food specialist retailers, sales trends, 1998-2007 Q3
Figure 12: Non-food specialist retailers as % of all retail sales: 1997 – 2007(e)
 RETAIL PRICE INFLATION
Figure 13: Indices of retail prices for product categories, 2000-07 (Jan 1987=100)
 BREAKDOWN OF SALES BY SUB-SECTOR
Figure 14: Non-food specialists: Breakdown of sales by sub-sector, 1999-2006
 CONSUMER EXPENDITURE
Figure 15: Consumer expenditure on selected product categories (£m), 1998-2007 Q2
 CHEMISTS: LATEST TRENDS
Figure 16: Health and beauty retailers’ operating profits, 2003-06
 BOOKS, NEWSPAPERS AND STATIONERY: LATEST TRENDS
Figure 17: Booksellers’ and stationers’ operating profits, 2003-06
 FLOOR COVERINGS: LATEST TRENDS
Figure 18: Floor coverings retailers’ operating profits, 2003-06
 PHOTOGRAPHIC AND OPTICAL GOODS, OFFICE SUPPLIES STORES: LATEST TRENDS
Figure 19: Photographic retailers’ operating profits, 2003-06
Figure 20: Leading optical retailers, 2005
 OTHER
Figure 21: Sports and outdoor leisure retailers’ operating profits, 2003-06
Figure 22: Toys and games retailers’ operating profits, 2003-06
Figure 23: Jewellers’ operating profits, 2003-06
SECTOR NEWS REVIEW: NON-FOODS RETAILING
 JUNE
 SPORTS AND LEISURE GOODS RETAILING
Blacks chief quits
JJB
…sees sales slip without World Cup boost
…and launches strategic review
…as FSA considers examining share sale by founder
Sports Direct
…chairman quits in frustration
…takes 5% stake in Amer
…and looks to oust Blacks board
 JEWELLERS
Signet Q1 profits slip
Theo Fennell shines across FY
 GARDEN CENTRES
Dobbies
…bought for £155m by Tesco
… before Hunter ups stake
…while Tesco regroups
…before battle heats up
 MISCELLANEOUS SPECIALIST RETAILING
Halfords FY sales race ahead
Jessops eyed by private equity bidder
Pets at Home could be floated or sold in 2008
 JULY
 MUSIC AND VIDEO GOODS RETAILING
Fopp flops
 SPORTS AND LEISURE GOODS RETAILING
Blacks
…rebounds
…with Freespirit sale to go ahead
JJB suffers from World Cup comparatives
Sports Direct
…buys Everlast
…buys majority stake in Field & Trek
…but warns on profit growth
 GARDEN CENTRES
Tesco
…battles on for Dobbies
…then extends offer
 TOYS AND GAMES RETAILING
Game Group H1 LFLs surge ahead
 AUGUST
 BOOK AND STATIONERY RETAILING
WH Smith
…considers bid for Borders
…and issues upbeat trading forecast
 SPORTS AND LEISURE GOODS RETAILING
John David beats sales forecasts
Sports Direct
…Ashley responds to City criticism
…before upping stake in Amer Sports
 GARDEN CENTRES
Dobbies
…sees Tesco bid go unconditional
…before rain forces profits warning
 TOYS AND GAMES RETAILING
Game Group’s Gamestation bid referred to commission
Games Workshop reports FY loss
Hamleys mulls over stores expansion
 MISCELLANEOUS SPECIALIST RETAILING
Halfords LFLs remain strong
 JEWELLERS
Signet reports sales growth in H1
 SEPTEMBER
 BOOK AND STATIONERY RETAILING
Borders’ UK stores sold to private equity firm
 SPORTS AND LEISURE GOODS RETAILING
Solid H1 performance for JD Group
JJB issues profit warning
Sports Direct
…sees trading remain ‘difficult’
…and acquires Nevisport
 JEWELLERS
Signet profit inches in H1
 GARDEN CENTRES
Hunter ups ante in garden centre battle
 TOYS AND GAMES RETAILING
Game Group back into the black in H1
 OCTOBER
 BOOK AND STATIONERY RETAILING
Clinton Cards FY profit soars
WH Smith FY profit up, LFLs down
 SPORTS AND LEISURE GOODS RETAILING
JJB H1 profit falls by 38%
 JEWELLERS
Goldsmiths
…reports FY losses
…as Baugur pursues Piasecki’s stake
Theo Fennel trading up in H1
 GARDEN CENTRES
‘Tesco will not harm Dobbies’ growth plans’
 TOYS AND GAMES RETAILING
Bear Factory boosts Hamleys’ FY profit
 MISCELLANEOUS SPECIALIST RETAILING
Halfords increases LFLs in H1
Bridgepoint considers sale of Pets at Home
 NOVEMBER
 BOOK AND STATIONERY RETAILING
Sales slow for Clinton Cards
WH Smith reports solid start to the financial year
 SPORTS AND LEISURE GOODS RETAILING
Blacks Leisure
…records LFL rise, pre-tax loss
…and appoints new chief executive
Sports Direct
…moves to scupper Nike’s Umbro bid
…sells Amer stake
 JEWELLERS
Goldsmiths boss to go
Signet posts strong third quarter
 MISCELLANEOUS SPECIALIST RETAILING
Halfords increases profits in H1
Pets at Home considering sale or float
SECTOR ADVERTISING REVIEW – NON-FOOD SPECIALISTS
 ADVERTISING EXPENDITURE
Figure 24: Total Advertising Spend by Non-Food Retailers, Sep 2003-Sep 2007
 USE OF MEDIA
Figure 25: Use of media by non-food retailers and all retailers (%), Sep 2006-Sep 2007
Figure 26: Use of media by non-food retailers and all retailers (£m), Sep 2006-Sep 2007
 BOOKS AND STATIONERY RETAILERS
Figure 27: Top ten books & stationery retailers by adspend, Sep 2006 & Sep 2007
Company analysis – WH Smith
Figure 28: WH Smith, media use by adspend and as share of total, Sep 2006 & Sep 2007
Figure 29: WH Smith, top brands by adspend, Sep 2007
 SPORTS AND LEISURE GOODS RETAILERS
Figure 30: Top ten sports and leisure goods retailers by adspend, Sep 2006 & Sep 2007
Company analysis – JJB Sports
Figure 31: JJB Sports, media use by adspend and as share of total, Sep 2006 & Sep 2007
Figure 32: JJB, top brands by adspend, Sep 2007
 JEWELLERS
Figure 33: Top ten jewellers by adspend, Sep 2006 & Sep 2007
Company analysis – Tiffany & Co
Figure 34: Tiffany & Co, media use by adspend and as share of total, Sep 2006 & Sep 2007
Figure 35: Tiffany & Co, top brands by adspend, September 2007
 GARDEN CENTRES
Figure 36: Top ten garden centres by adspend, Sep 2006 & Sep 2007
Company analysis – Hollybush Nurseries
Figure 37: Hollybush Nurseries, media use by adspend and as share of total, Sep 2006 & Sep 2007
Figure 38: Hollybush Nurseries, top brands by adspend, Sep 2007
 CHEMISTS (HEALTH & BEAUTY RETAILERS)
Figure 39: Top ten chemists by adspend, Sep 2006 & Sep 2007
Company analysis – Lloyds Pharmacy
Figure 40: Lloyds Pharmacy, media use by adspend and as share of total, Sep 2006 & Sep 2007
Figure 41: Lloyds Pharmacy, top brands by adspend, Sep 2007
 TOYS AND GAMES RETAILERS
Figure 42: Top five toys and games retailers by adspend, Sep 2006 & Sep 2007
Figure 43: Top video games retailers by adspend, Sep 2006 & Sep 2007
Company analysis – Toys R Us
Figure 44: Toys R Us, media use by adspend and as share of total, Sep 2006 & Sep 2007
Figure 45: Toys R Us, top brands by adspend, Sep 2007
 OPTICAL RETAILERS
Figure 46: Top Ten optical goods retailers by adspend, Sep 2006 & Sep 2007
Company analysis – Specsavers
Figure 47: Specsavers, media use by adspend and as share of total, Sep 2006 & Sep 2007
Figure 48: Specsavers, top brands by adspend, Sep 2007
 MISCELLANEOUS RETAILERS
Figure 49: Top two miscellaneous retailers by adspend, Sep 2006 & Sep 2007
Company analysis – Halfords
Figure 50: Halfords, media use by adspend and as share of total, Sep 2006 & Sep 2007
Figure 51: Halfords, top brands by adspend, Sep 2007
Nielsen Media Research/ Definitions
SPENDING INTENTIONS – CHRISTMAS 2007
 NEVER MIND THE PROBLEMS, WE’RE GOING TO HAVE A GOOD CHRISTMAS
Key Points
The background
Figure 52: Retail sales growth, 2006-07
How much will you spend?
Figure 53: Expected spending relative to last year, 2007
Figure 54: Those expecting to spend more minus those expecting to spend less, 2001-07
Figure 55: Sum expected to be spent on gifts, 2001-07
What will people buy?
Figure 56: Items bought or likely to buy this Christmas, October 2001-07
The Internet and the high street
Figure 57: Those who plan to use the Internet for gift buying, 2002-07
Attitudes
Figure 58: Attitudes to Christmas shopping, 2001-07
Appendix – the tables
Figure 59: Items bought or likely to buy this Christmas, October 2006
Figure 60: Items bought or likely to buy this Christmas, October 2007
Figure 61: Items bought or likely to buy this Christmas, October 2007
Figure 62: Spending compared to last year, October 2007
Figure 63: Spending compared to last year, October 2007
Figure 64: Amount expected to spend this Christmas on gifts for close friends and family, October 2007
Figure 65: Amount expected to spend this Christmas on gifts for close friends and family, October 2007
Figure 66: Christmas shopping behaviour and attitudes towards Christmas shopping, October 2007
Figure 67: Christmas shopping behaviour and attitudes towards Christmas shopping, October 2007
Figure 68: Christmas shopping behaviour and attitudes towards Christmas shopping, October 2007