January retail figures worst for 15 years

Like for like sales fell by 0.7% on the previous year {rise of 1.1%} reports KPMG BRC retail.
The cause was primarily the weather which shut down the tail end of the January sales and ended an latent desire for consumerism.

Even food, which had a bumper start to January with panic buying, fell away once the heavy snow came. Clothing and footwear made a partial recovery, people finding that summer shoes and T/shirts are far from ideal winterwear but understandably homewares and furniture were poor. The figures are also inflated in £ terms by being a 17.5% set vs a 15% VAT last year, which appears to show higher sales, but actually only shows higher tax.

The news that online sales were significantly up was a slight surprise. There was expectation that online bargains and wished for items that hadn't appeared in the stockings would drive sales.
What was a surprise was that Royal Mail was very badly affected by the snow. Much more so than during the recent strikes. Guarantees were suspended for days on end and mail backed up in depots, in stranded lorries and undelivered in mail centres. That must have put a dent into those figures that could have been even better. Maybe CU, currently in Moscow, could see how the Russians manager to deliver mail at -20* ?

The Telegraph is one paper using the figures to ponder whether a double-dip is now much more likely. That may well be the case but it would foolish to consider these figures without allowing for the exceptional weather effects that led to them.

Its not what you know, but how much you owe

JJB has secured a company voluntary agreement (CVA) with its landlords. The 11th hour deal effectively removes JJB from the top of our list of most likely not to see 2010, and gives it a valuable lifeline.

JJB is able to walk away from its dud, crippling leases and still owed final rents on the 140 shops it has shut, and move to a monthly, rather than quarterly rent agreement. Enormous help in a cash strapped market and something Brown & co should have been 'encouraging' landlords to deal with a long time ago. JJB can use its existing turnover to pay the rents, instead of having to borrow in advance at ultra high rates.
The story shows how the collapse of Woolworth, much like Lehman Brothers in the financial world, changed the rules. In February, a CVA to rescue to U.K. high-street shoe chains Barratts Shoes and Priceless Shoes failed after landlord voted against it because they didn't want to accept lower rents.Now landlords do not want another large chain to go down, and are willing , within reason , to offer help. JJB owes around £60 million. Landlords would have seen little of that if the company fell into administration, so a deal has been struck, not without considerable loss to themselves. But CVA's, a very rare form of pre administration, that really should become more popular. The "pre-pack" administration is a terrible deal for creditors, and an easy way for a companies owners to buy the stores and stock back cheaply,dumping problem staff, suppliers and liabilities and without any onerous leases.

Struggling JJB saw its shares rise 26 per cent - up 4¾p to 23p - after taking steps to avoid bankruptcy, but it is certainly not safe yet. We do not know if it has happened in this case but there is often a reciprocal renegotiation of leases, allowing the landlord to terminate a shop lease, with minimum notice, if a better client comes along. Not a problem in the current climate, but JJB could lose its best sites when the recovery comes. It also loses its bargaining power in shopping centres and high streets and will unlikely to gain any A+ units unless they have been unlet for a very long time.

Still, good news for the 12,000 odd staff of JJB, who retain their jobs for now at least. Prehaps they should consider a transfer to their rival JD Sports who saw their profits rise 9% in 2008 and trading in the new year has started well. The sports and leisure outfit said pre-tax, post-exceptional profit had risen to £38.2m, from £35m.

Sales down but that means higher sales?

Poor shopper figures in November point the way to a ‘back-to-basics Christmas’
British November same-store retail sales values fell 2.6% compared to the same month last year

Its hard to know what's going on in the world. Even harder when this is being reported by BBC radio 5 live as "the fear of a Christmas slowdown hasn't materialised as figures released by the BRC show shoppers are spending in the stores"

Yet the November figures show that this is the first time sales have declined in two consecutive months since the survey began in January 1995.

If we just look at how the google headlines are coming out;
BRC figures indicate retailing under pressure:MarketWatch
Economic slowdown: A bleak Christmas:Edinburgh Journal
Britain's high streets face their bleakest year for four decades: The Times
Consumers tightened their belts even further in November:FT
High street sales have seen an unprecedented fall despite heavy discounting :Telegraph
British retail sales fell at their sharpest annual pace in more than three years :Guardian

and even BBC business news has
Retail sales 'fall still further'

5 live have been desperately trying to sound upbeat after a few "Spinners" erm I mean "listeners" complained that it was too gloomy. Every broadcast on the economic front has to have a sunny upside.Even if there isn't one.

They should just stick to the sport...

"Of course, they're all raving mad, you know!".

Some people have been looking for patriotic ways to go forth and multiply their credit card payments in order to help the UK through the recession. Among others Blue Eyes wants to know what Britain makes and Hatfield Girl is disappointed by a trip to London's West End.

This desire to back Britain is not new. Forty years ago 1968 the "I'm Backing Britain" campaign got going. Five secretaries volunteered to work an extra half an hour each day without pay in order to boost productivity, and urged others to do the same. Prime Minister Harold Wilson was delighted to seize the opportunity to endorse the campaign. Harold was an even better spinner than Gordon, and had that same feel for a popular story and the public mood as Tony. He needed a boost as the British economy was in difficulties. Despite tax increases announced in July 1966, the 1967 budget had seen the greatest deficit in post-war history of £1,000m.{2008 excluded} The government famously had to devalue the pound from $2.80 to $2.40. The only good news was the "opportunity" to increase exports.

Robert Maxwell waded in with his "Buy British" campaign and a very brief jingoistic period of late 20th century British Union Jack flag waving history began. Just a few weeks ago The Archbishop of York called on the Government to lead a campaign to encourage shoppers to buy British food

It is worth a quick read to see how these well meaning and well intentioned campaigns turned out.It was always going to be tough even with the advantages of limited globalisation and a stronger British manufacturing base. Calls on the public spirit couldn't hide the economic realities.. The best example being the thousands of T/Shirts with the "I'm Backing Britain" slogan, that had actually been manufactured in Portugal.. The marketing director explained that "we just cannot find a British T-shirt which will give us the same quality at a price which will compare"

At the conclusion of the film Carry on up the Khyber which opened in November 1968, the raising of a Union Flag with the "I'm Backing Britain" slogan is greeted by the evangelist Brother Belcher, fresh from his dinner under shellfire with His Excellency Sir Sidney Ruff-Diamond, turning to camera and saying..

"Of course, they're all raving mad, you know!"

“everyone has a share.” The result of G20

Gordon Brown explains Milo Economics to the other leaders of the G20

Milo's M&M Enterpises syndicate is selling seven-cent Maltese eggs to the mess halls at a price of only five cents an egg while still making a profit.

How?

Seven-cent Maltese eggs cost the sellers in Malta four and one-quarter cents each to procure. Milo is actually buying the eggs from himself in Malta, which means that as a seller there he is making two and three-quarter cents each egg. After he resells the seven-cent eggs to the mess halls for five cents each, he is still making a three-quarter cent profit per egg.

However, it turns out that Milo's Maltese eggs are actually one-cent Sicilian eggs which he has secretly shipped to Malta to drive up their value, yielding him another three and one-quarter cents profit per egg.

 "I make a profit of three and one-quarter cents apiece, and everybody comes out ahead."

"Do I have a share?"

"Everybody has a share."

"Does Orr have a share?"

"Everybody has a share."

"And Hungry Joe? He has a share too?"

"Everybody has a share."

"Well, I'll be damned."

"What's good for M&M enterprises is good for the country"

But Orr crashed into the sea and when the crew went to inflate their life jackets..
The life jackets failed to inflate because Milo had removed the twin carbon-dioxide cylinders from the inflating chambers to make the strawberry and crushed-pineapple ice-cream sodas he served in the officer's mess hall and had replaced them with mimeographed notes that read: "What's good the M & M Enterprises is good for the country."

Chaplin: Cheer up Yossarian. Milo's selling oranges and the syndicate is making so much money.
Yossarian: We won't see any of that money. We won't even see the oranges.

Debenham's shows the outlook for retail

Debenham's gave a retail update this morning, its sales are down 0.9% although it says it is gaining market share (its competitors are M&S, Next and John Lewis). Its debt burden, built by the financial wizardy of Private Equity ownership, is £994 million, down nearly £200 million from last year. The current management team are up for a near £50 million windfall between them from the re-float of the company after the Private Equity ownership.

But to do this it has had to cut its dividend to 0.5 pence per share (still not too bad with the shares now at 33p, less useful if you had bought them when it floated at £2 a share).

The story here though is of a company is pure stasis. It has too much debt to invest in any new products, stores or technology and it faces a tough consumer market in a receession. Yet good management may see it through, but this won't be the driver of the UK's way out of a recession.

It is a fragile company despite its size and history and as such it reflects much of the UK retail market. The share prices of this industry are under-pressure and it looks like it will stay that way with results like this.