UK Apparel Retail check-up

All,

Apparel retail remains under pressure. 

ABF reported on Monday that Primark was seeing LfL sales down 1.3%. In contrast to other retailers however, Primark had reported particularly good trading results in November and December and the weakening is claimed to be a result of very strong comps in early 2019. Margins for the business as a whole (not just UK) are expected to be down by over 2.5% however.

For neither New Look, nor Matalan do we recall any “very strong” results in 2019, so we imagine they won’t have that “problem”. Neither performed well over Christmas either. 

Predictably, shop prices are reported to be falling. The BRC-Nielsen non-food index is down 1.5% and 1.9% respectively for the first two months of the year. So apparel should be going in the same direction, but of course be more volatile. 

Yet so far New Look’s online store remains well presented and focused on the spring collection. The Sale, is confined to a tidy page behind an elegant red link, suggests no desperation. Next are at a similar stage. Matalan are already showing first sale items on the front page. Boohoo are already up-front about it with a big banner all across, placating "20% off everything". Joules is at 30%. The GAP and Missguided are offering 50% off everything (t’s & c's still apply…).

Both, Matalan and New Look went into calendar Q1 with healthy stock positions, but cautious expectations.

Wolfgang