Christmas gloom casts pall over British retail

A Christmas crunch inflicted further pain on more British retailers on Thursday, with John Lewis warning its staff they may not get a bonus for the first time since 1953 as consumers changed shopping habits and the economy struggled.

John Lewis flagged lower profits for its 2019 financial year, while Tesco, Britain’s biggest retailer, ground out a 0.1 percent rise in underlying UK sales over Christmas, and Marks & Spencer said waste in its food business and weak menswear and gift sales held it back.

Industry data showed British shoppers cut back on spending in late 2019, rounding off the worst year since at least the mid-1990s for retail sales amid uncertainty over Brexit, last month’s election and slowing wage growth.

Instead of buying goods, consumers opted to spend on experiences, data from payment card company Barclaycard showed. Cinema ticket sales were up 19 percent, while spending in pubs and on takeaway food rose by about 12 percent, the data showed.

Tesco said Prime Minister Boris Johnson’s resounding election victory in December, which broke the deadlock over Britain leaving the European Union and lifted financial market sentiment, had not released any pent-up demand.

Adding to worries that a pick-up may not materialise, Sainsbury’s, Britain’s second largest supermarket, said on Wednesday it hadn’t seen any change in behaviour since the nation went to the polls.

Concerns over the strength of the British economy are being felt more widely and the pound fell to a near two-week low against the US dollar after Bank of England Governor Mark Carney said that there could be a “relatively prompt response” if it looked as though weakness will persist.

For employee-owned John Lewis Partnership, which runs the eponymous department stores business and up-market supermarket Waitrose, the prospect of not paying a bonus for the first time since 1953 highlights how tough times are for some retailers.

Like rival department stores, John Lewis has been under pressure for some time, and in March last year reported a 45 percent drop in full-year profit, hurt by weak demand and rising costs.

It is not just the big guns suffering, with pain also being felt among niche players such as British greeting card retailer Card Factory, which said it expected lower annual earnings, sending its shares down 17 percent.

Amid the gloom there have been some bright spots, with homeware retailer Dunelm forecasting a near 20 percent jump in earnings for the first half of its fiscal year, thanks to its decision not to discount over the holiday season.