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UK Retail Briefing - May 2008

ANALYST COMMENT
 SLOWDOWN, NOT RECESSION
More heat than light
Non-comparable periods
Different results
Why so different?
Where now?
THE MONTH IN UK RETAILING
 BAKERS (RETAIL)
Greggs blames weather for slowing rise in LFLs
Thorntons posts Q3 sales rise
 CO-OPS (RETAIL)
OFT accuses retailers of tobacco price-fixing
Co-op:
…FY profits grow
…clashes with Soil Association
 GROCERS
Grocers accused of further price-fixing by OFT
Competition Commission findings
Asda drops opposition to proposed code of conduct
Morrisons:
…receives apology from OFT over dairy fixing
…announces plans to cut plastic bag use
Sainsbury’s:
…to launch Tu home brand
…CEO to collect £6.5m bonus
…reports FY results
Tesco:
…to sell property website
…launches website for Polish immigrants
… to be thwarted by Hunter over Dobbies plans?
…buys South Korean Homever stores for £958m
…objects to Ocado’s price claims grow
Waitrose to open 100 convenience stores
 OFF-LICENCES
Thresher to close 30 Scottish stores
 CLOTHING RETAILING
Austin Reed plans expansion, following sales rise
Burberry sees sales growth
Ethel Austin:
…collapses into administration
…receives 40 potential bids
Fat Face signs for eight new stores
Internacionale:
…goes into administration
…sold to unnamed buyer
Jaeger’s FY sales rise 16%
MK One
…put up for sale by Baugur
…sold to Hilco
Matalan sets aside £20m for revamp
Mosaic reports FY loss, on sales up 49%
Baugur may sell Moss Bros stake
Next reports drop in Q1 sales
ABF H1 profit boosted by Primark
 FOOTWEAR RETAILING
Private equity firms bid for LK Bennett
 MIXED GOODS RETAILING
Home Retail Group FY sales/profits rise, warns of outlook
Instore cuts FY loss
 MULTI-SECTOR RETAILING
Boots’ Pessina to accelerate growth
HMV reports 7.3% rise in FY LFLs
M&S:
…faces dispute over Rose investment
…chief sells sing-a-long stake
…to cut staff bonuses
…FY profits reach £1bn
 ELECTRICAL RETAILING
DSGi:
… could close 200 outlets, cuts dividend
…to close stores in strategic move
 FURNITURE RETAILING
Land of Leather:
…reports Q3 LFLs plunge
…fined by FSA
ScS issues new profit warning
 HOME SHOPPING
Asos forecasts profit boost, after sales soar
Findel issues profit warning
N Brown delivers strong FY results
 BOOK AND STATIONERY RETAILING
Clinton Cards Q3 LFLs up
Endless goes shopping for The Works
WH Smith posts full-year profit rise
 SPORTS AND LEISURE GOODS RETAILING
OFT scolds Sports Direct over purported store closures
JJB:
…posts 5.3% drop in Q1 LFLs
…to axe 800 following profit plunge
 JEWELLERS
Signet posts 2.5% decline in like-for-like Q1 sales
 TOYS AND GAMES RETAILING
Game Group reports FY sales up
 MISCELLANEOUS SPECIALIST RETAILING
Pets at Home reveals FY success
EXECUTIVE APPOINTMENTS
Austin Reed appoints first menswear designer
Brantano hires new MD
Brantano chief exits
Robert Dyas appoints ex-MFI director as new CEO
Hamleys chief exits after posting 15.5% LFLs jump
Instore hires new finance director
Kingfisher’s finance director announces resignation
Liberty finance director departs
Galvin quits MK One
Morrisons appoints new non-food executive
New Look in management shuffle
Pier’s managing director steps down
SRG looks for new chief
SRG appoints new MD
Wallis appoints three new execs
Whistles poaches Topshop directors
PRODUCT DEVELOPMENT – BEVERAGES
 ASDA
 MARKS & SPENCER
 SAINSBURY’S
 SOMERFIELD
 TESCO
ADVERTISING NEWS
 NEW CAMPAIGNS
Asda outsources search and display campaign
Iceland signs Katona
Morrisons to adopt environmental marketing strategy
Waitrose to launch new ad campaign
 ACCOUNT GAINS/LOSSES
Holland & Barrett appoint WCRS
RETAIL ADVERTISING REVIEW
 ADVERTISING EXPENDITURE
Figure 1: Total advertising expenditure by all advertisers (£m), Feb 2004-Feb 2008
Figure 2: Total advertising expenditure by all retail advertisers (£m), Feb 2004-Feb 2007
 USE OF MEDIA
Figure 3: Use of media by retail and all advertisers (£m), Feb 2007-Feb 2008
Figure 4: Use of media by retail and all advertisers (%), Feb 2007-Feb 2008
 TOP 25 RETAIL ADVERTISERS
Figure 5: Top 25 retailers by adspend (£), Jan 2008-Feb 2008
Food
Furniture
Optical Retailers
DIY
Other
Nielsen Media Research/ Definitions
RETAIL SALES AND INFLATION
 RETAIL SALES
Office for National Statistics
Figure 6: Retail sales trends: Mar 2007-Mar 2008
Figure 7: Non seasonally adjusted % value change on previous year, Mar 2007-Mar 2008
Figure 8: Seasonally adjusted % volume change on previous year, Mar 2007-Mar 2008
Significant features of February’s 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: Mar 2007-Mar 2008
Figure 10: Annual percentage change in retail price index for selected product groups: Mar 2007-Mar 2008
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, 1998-2008 Q1
Figure 12: Non-food specialist retailers as % of all retail sales: 1999-2008 (e)
 RETAIL PRICE INFLATION
Figure 13: Indices of retail prices for product categories, 2000-08 (Jan 1987=100)
 BREAKDOWN OF SALES BY SUB-SECTOR
Figure 14: Non-food specialists: Breakdown of sales by sub-sector, 2000-07
 CONSUMER EXPENDITURE
Figure 15: Consumer expenditure on selected product categories (£m), 1998-2007
 CHEMISTS: LATEST TRENDS
Figure 16: Health and beauty retailers’ sales, 2003/04-2006/07
 BOOKS, NEWSPAPERS & STATIONERY: LATEST TRENDS
Figure 17: Booksellers’ and stationers’ operating profits, 2003/04-2007/08
 FLOOR COVERINGS: LATEST TRENDS
Figure 18: Floor coverings retailers’ operating profits, 2003/04-2006/07
 PHOTOGRAPHIC & OPTICAL GOODS, OFFICE SUPPLIES STORES: LATEST TRENDS
Figure 19: Photographic retailers’ Sales, 2003/04-2006/07
Figure 20: Number of outlets in leading opticians chains, UK, 2003, 2005 and 2007
 OTHER
Figure 21: Sports and outdoor leisure retailers’ sales, 2003/04-2006/07
Figure 22: Toys and games retailers’ operating profits, 2003/04-2006/07
Figure 23: Jewellers’ operating profits, 2003/04-2006/07
SECTOR NEWS REVIEW: NON-FOOD RETAILING
 DECEMBER
 SPORTS AND LEISURE GOODS RETAILING
JD Group improves LFLs, warns on tougher trading
JJB
…LFLs up 1.6%
…as it acquires Original Shoe Company
Sports Direct
…sees Ashley plan to increase stake
…as Sports Direct posts weak H1
 JEWELLERS
Signet warns on FY profit
Theo Fennel boss seeks international expansion
 TOYS AND GAMES RETAILING
Game
…provisionally cleared for Gamestation takeover
…as strong performance continues
 JANUARY
 BOOK AND STATIONERY RETAILING
Clinton Cards LFLs up 2.5% over Christmas
 SPORTS AND LEISURE GOODS RETAILING
Blacks Leisure reports promising Christmas sales
JD records excellent Christmas performance
JJB
…agrees to settle over football shirts
…and issues profit warning
Which? names JD/JJB worst UK retailers
Sports Direct expects “difficult” market
 JEWELLERS
Signet suffers over Christmas
Theo Fennell’s December sales up 2%
 TOYS AND GAMES RETAILING
Game’s Christmas sales soar
Games Workshop reports H1 loss
 FEBRUARY
 BOOK AND STATIONERY RETAILING
Borders chief plans review
The Works crashes into administration
WH Smith LFLs down 2%
 SPORTS AND LEISURE GOODS RETAILING
JJB
…to support Nike’s takeover of Umbro
…and sells Soccer Domes
Sports Direct invests £20m in Chinese venture
 JEWELLERS
Signet reports FY sales slide
 TOYS AND GAMES RETAILING
Hamleys LFLs up 11.3% during Christmas
 MISCELLANEOUS SPECIALIST RETAILING
Halfords chief to join Coles, LFLs up 2%
 MARCH
 SPORTS AND LEISURE GOODS RETAILING
Blacks hit by accounting probe, suspends director
Sports Direct “in-line” to meet expectations
 TOYS AND GAMES RETAILING
Game increases FY profit forecast
 APRIL
 BOOK AND STATIONERY RETAILING
Clinton Cards posts strong H1 figures
The Works on brink of sale
WH Smith buys hospital shops
 SPORTS AND LEISURE GOODS RETAILING
JD Group reports strong FY results
 TOYS AND GAMES RETAILING
Toyzone:
… enters administration
… rescued from administration
 JEWELLERS
Signet FY profit down 17%
 MISCELLANEOUS SPECIALIST RETAILING
Halfords reports strong FY LFLs
 GARDEN CENTRES
Dobbies posts mixed results
 MAY
 BOOK AND STATIONERY RETAILING
Clinton Cards Q3 LFLs up
Endless goes shopping for The Works
WH Smith posts full-year profit rise
 SPORTS AND LEISURE GOODS RETAILING
OFT scolds Sports Direct over purported store closures
JJB:
…posts 5.3% drop in Q1 LFLs
…to axe 800 following profit plunge
 JEWELLERS
Signet posts 2.5% decline in like-for-like Q1 sales
 TOYS AND GAMES RETAILING
Game Group reports FY sales up
Hamleys chief exits after posting 15.5% LFLs jump
 MISCELLANEOUS SPECIALIST RETAILING
Pets at Home reveals full-year success
SECTOR ADVERTISING REVIEW – NON-FOOD SPECIALISTS
 ADVERTISING EXPENDITURE
Figure 24: Total advertising expenditure by non-food retailers, Feb 2004-Feb 2008
 USE OF MEDIA
Figure 25: Use of media by non-food retailer and all retailers (%), Feb 2007-Feb 2008
Figure 26: Use of media by non-food retailers and all retailers (£), Feb 2007-Feb 2008
 BOOKS AND STATIONERY RETAILERS
Figure 27: Top ten books & stationery retailers by adspend, Feb 2007 & Feb 2008
Company analysis – Staples
Figure 28: Staples, media use by adspend and as share of total, Feb 2007 & Feb 2008
Figure 29: Staples, top brands by adspend, Feb 2008
 SPORTS AND LEISURE GOODS RETAILERS
Figure 30: Top ten sports & leisure goods retailers by adspend, Feb 2007 & Feb 2008
Company analysis – JD Sports
Figure 31: JD Sports, media use by adspend and as share of total, Feb 2007 & Feb 2008
Figure 32: JJB, top brands by adspend, Feb 2008
 JEWELLERS
Figure 33: Top ten jewellers by adspend, Feb 2007 & Feb 2008
Company analysis – Tiffany & Co
Figure 34: Tiffany & Co, media use by adspend and as share of total, Feb 2007 & Feb 2008
Figure 35: Tiffany & Co, top brands by adspend, February 2008
 GARDEN CENTRES
Figure 36: Top ten garden centres by adspend, Feb 2007 & Feb 2008
Company analysis – Wyevale
Figure 37: Wyevale Garden Centres, media use by adspend and as share of total, Feb 2007 & Feb 2008
Figure 38: Wydevale Garden Centres, top brands by adspend, Feb 2008
 CHEMISTS (HEALTH & BEAUTY RETAILERS)
Figure 39: Top ten chemists by adspend, Feb 2007 & Feb 2008
Company analysis – Superdrug
Figure 40: Superdrug, media use by adspend and as share of total, Feb 2007 & Feb 2008
Figure 41: Superdrug, top brands by adspend, Feb 2008
 TOYS AND GAMES RETAILERS
Figure 42: Top five toys and games retailers by adspend, Feb 2007 & Feb 2008
Figure 43: Top video games retailers by adspend, Feb 2007 & Feb 2008
Company analysis – Toys R Us
Figure 44: Toys R Us, media use by adspend and as share of total, Feb 2007 & Feb 2008
Figure 45: Toys R Us, top brands by adspend, Feb 2008
 OPTICAL RETAILERS
Figure 46: Top Ten optical goods retailers by adspend, Feb 2007 & Feb 2008
Company analysis – Specsavers
Figure 47: Specsavers, media use by adspend and as share of total, Feb 2007 & Feb 2008
Figure 48: Specsavers, top brands by adspend, Feb 2008
 MISCELLANEOUS RETAILERS
Figure 49: Top two miscellaneous retailers by adspend, Feb 2007 & Feb 2008
Company analysis – Halfords
Figure 50: Halfords, media use by adspend and as share of total, Feb 2007 & Feb 2008
Figure 51: Halfords, top brands by adspend, Feb 2008
REPORT FOCUS: FOOTWEAR RETAILING
Market growth, at what price?
Footwear feeling the pinch
Not all bad
Footwear going walkabout
Fashion drivers
Let’s hear it for the boys
Don’t forget comfort
Too cheap?
Clarks stands out
New channels
The future
 CONSUMERS: HOW MUCH, WHERE AND WHY
Cheap shoe myth?
Figure 52: How much they spend on a pair of shoes, February 2008
It’s not all about the money
Figure 53: How much they spend per pair of shoes, by gender, age and socio-economic groups, February 2008
Spending by leading retailers
Where and by whom
Figure 54: Where they buy footwear, February 2008
Stores with focus have a clearer target
Mixed purchasing pattern
Male fashion stores
Holding onto existing customers
Young are open to new ideas
Value footwear exposed
Figure 55: Where they buy footwear, by gender, age and socio-economic groups, February 2008
Why?
Figure 56: What they think of shoe shopping, February 2008
A world of treats and indulgence
Sales appeal to all
Figure 57: What they think of shoe shopping, by gender, age and socio-economic groups, February 2008
Attitudes to shoe shopping by leading retailers
Sales – a time for investment and indulgence
 PROFILE OF LEADING RETAILERS
C&J Clark (UK)
Figure 58: C&J Clark Group: Group financial performance, 2002-07
Russell & Bromley
Figure 59: Russell & Bromley, group financial performance, 2002-06
Schuh
Figure 60: Schuh, group financial performance, 2003-07
 INDUSTRY INSIGHT
Running to keep up
Some like it cheap
Online on target
 THE FUTURE
Spending struggling to grow
Figure 61: UK: Spending on footwear, 2002-07
Bigger share for non-specialists
Changes need to be made
The transition from manufacturing to retailing
Figure 62: Footwear specialists sales, UK, 2002-07
Figure 63: Footwear specialist sales and spending on footwear, 2008-13, at current and constant 2008 prices, excl VAT, 2003-13
Looking ahead

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