More UK retailers post disappointing profits

More large retailers have confirmed that their Christmas profits were below expectations.

Supermarket chain Morrisons have joined retailers Debenhams in issuing a profit warning to the stock market while both Tescos and Marks & Spencer have both said they had disappointing Christmas trading.

Morrisons, which may be opening a new Exeter store near the Police Headquarters in Middlemoor, revealed today (9 January) that its full-year profits were well below market expectations.

The supermarket chain was expected to achieve profits of £812m but will instead be closer to the £782m mark.

The chain’s share price has fallen dramatically since the news was announced and is currently down by 17.03p to 237.94p per share.

The share price has been falling since November and despite a increase at the beginning of January is at its lowest point in months.

The retailer has blamed its relative lack of online sales and poor trading from its smaller convenience stores during the Christmas period which saw its sales figures fall by 5.6% in the six weeks up to January 5th.

Morrison’s chief executive, Dalton Philips, said: "In a very tough market our sales performance over Christmas was disappointing."

Morrisons joins department store chains Debenhams in issuing a unscheduled profit warning due a disappointing Christmas period.

Tesco also saw smaller than expected Christmas sales reducing its forecasted year-end profits by between £50m to £150m.

Surprisingly, despite strong online and convenience store sales, Tesco has said that its large out-of-town stores performed poorly during the Christmas period.

Some commentators have said that with incomes squeezed by rising prices and stagnant wages consumer spending power has been reduced.

However in Exeter the picture looks significantly different with City Centre Manager John Harvey saying that Exeter had “our best Christmas in a number of years.”

He said: “It is perhaps a little early to make a judgement on it but there is more consumer confidence now than 12 months ago.

“For me there is no argument; consumer confidence is beginning to come back.”

Several stores have posted very healthy profits during the Christmas period such as fashion retailer, Next which had a strong Christmas performance as sales in the period from November 1 to December 24 rose by 11.9%.

Next has raised its profit forecast for the year to January 25 to between £684m and £700m on the back of this performance.

Likewise department store John Lewis saw its like-for-like sales rise by 6.9% compared to the previous year.

Furthermore this Christmas has seen more purchases of larger more expensive purchases such as DIY, electronics and cars than previous years.

However there is still a general caution in everyday spending as consumers are generally shopping more cheaply for food and clothing.

This year also saw the continuing trend of increasing online sales accounting for more of companies profits than before.

Tesco in particular has had success with its ‘click-and-collect’ system proving popular with customers.

Morrison’s which has previously resisted online sales will launch its online sales service in partnership with Ocado on Friday.