Online and DIY sales hand firms lifeline as UK retailers 'struggle to survive'

Tom Belger
·Finance and policy reporter
·3 min read
LONDON, UNITED KINGDOM - 2020/08/04: A DIY store B&Q logo at a branch in London. (Photo by Dave Rushen/SOPA Images/LightRocket via Getty Images)
B&Q sales jumped. Photo: Dave Rushen/SOPA Images/LightRocket via Getty Images.

UK retail chiefs are warning 2020 marked the worst year on record for sales, as new figures show store sales slumped by a quarter on pre-virus levels and even Christmas offered “little respite.”

But a string of figures out on Tuesday underline the contrasting fortunes of different areas of retail as firms grapple with the upheaval of COVID-19.

While the British Retail Consortium (BRC) was warning many firms are “struggling to survive,” updates from several major companies show them reaping the rewards of COVID-induced shifts in the retail landscape.

B&Q and Screwfix owner Kingfisher (KGF.L) said it continued to benefit from “strong demand” in a trading update to investors. Like-for-like sales between November and early January jumped 16.9% year-on-year across the group.

E-commerce sales at the company soared by more than 150% in its fourth quarter to 9 January, according to its latest update. The company said its 2020-21 earnings would be at the top end of analyst estimates.

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READ MORE: B&Q and Screwfix sales soar as Brits embrace lockdown DIY

CEO Thierry Garnier attributed the boom to strong DIY demand during the coronavirus crisis, saying in November its customers were spending “more time in their homes and focused on improving them.”

Meanwhile online retail company The Hut Group, which owns a string of brands including in beauty, nutrition and fashion, announced on Tuesday it had seen a 51% leap in revenue growth in 2020.

The sales surge outperformed its previous guidance, with sales growth in the final three months of the year accelerating on the previous quarter. Group sales came in at £558.7m ($759.2m) between October and December, up from £370m a year earlier.

The conglomerate, which floated on the London Stock Exchange in September, said it had created 3,000 new roles in 2020, mainly in the UK.

Kingfisher stocks jumped more than 2% on strong sales on Tuesday (12 January). Chart: Yahoo Finance UK
Kingfisher stocks jumped more than 2% on strong sales on Tuesday (12 January). Chart: Yahoo Finance UK

The strong sales figures at The Hut Group and Kingfisher come in spite of the wider woes of much of Britain’s retail sector as the coronavirus has forced repeated store closures.

New BRC data suggests retailers eked out overall growth of 1.8% year-on-year in sales in December. But it marked a slowdown compared to recent months, with September’s figures up 5.6%.

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Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said retailers banking last month on recovering sales lost during England’s November lockdown would be “sorely disappointed.” He noted BDO’s High Street Sales Tracker also showed December non-food retail sales growth at its lowest since August.

Helen Dickinson, chief executive of the BRC, said the crucial pre-Christmas trading period had offered “little respite,” with many firms still closed under regional coronavirus restrictions.

“With shops still closed for the foreseeable future, costing stores billions in lost sales, many retailers are struggling to survive,” she said, calling for an extension to business rate relief.

Fashion, accessories and beauty sales saw double-digit declines in year-on-year sales.

BRC data on online sales, making up almost half of all sales, for non-food products marked a more promising picture however. Non-food sales online jumped 44.8% year-on-year in December, while leading food retailers also reported record sales.

Analysts note many retailers have significantly improved and expanded their online delivery operations, cushioning more of the blow from coronavirus restrictions compared to the first nationwide lockdown.

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