Stores' mixed bag of results blamed on severe weather
The severe weather last month appears to have had a mixed impact on UK retailers after the likes of Tesco, Game and Argos owner Home Retail posted Christmas trading updates reflecting varying degrees of success.
Shares in Game jumped after it said demand for motion-sensing devices Kinect for the Xbox and PlayStation's Move helped lift sales, while Home Retail offset recent concerns about its performance by revealing that sales of laptops and toys had kept it on course to meet profits hopes.
But Tesco disappointed the City with modest UK sales growth, which it blamed on the heavy snowfall and freezing temperatures, and Dixons also put its own weak performance down to the adverse weather conditions.
While the snow and ice were unhelpful for the retail sector, blaming the adverse weather could be an excuse for poor performance, one analyst said.
The trading updates follow strong performances from the likes of Sainsbury's and Marks -amp; Spencer and weaker shows from HMV and Next.
Neil Saunders, consulting director at retail analyst Verdict, said: "Generally, the weather is probably unhelpful but that said it's not the disaster many people have painted it to be.
"The snow is being used as somewhat of an excuse. For example, Tesco blamed the weather - but their performance could not have just been impacted by the weather otherwise Sainsbury's and Morrisons would not have done as well."
Mr Saunders said the snow had a "polarising" effect, with robust businesses continuing to do well and companies with underlying problems doing worse than expected.
He said: "If you have a business which is not attractive to the consumer, the snow makes it very easy for consumers to give it a miss. HMV is a good example, why would you buy CDs or DVDs from HMV when they're available from grocers or online?"
Tesco, the UK's biggest supermarket said the heavy snowfall and freezing temperatures "hindered" its Christmas trading, particularly hitting non-food sales, such as electrical goods.
The company posted modest 0.6% growth in same-store sales in the six weeks to January 8, which does not compare well to rivals Sainsbury's and Morrisons who reported stronger growth this week.
Tesco said the non-food sales were hit because customers were unable to get to the larger out-of-town stores, where the non-food offering is greater.
Back on the high street, Home Retail said strong demand for laptops and toys helped it to deliver a better-than-expected performance. While it reported 4.9% decline in like-for-like sales, this same-store figure was still better than the rate of 6.5% reported by the company in October.
Elsewhere, Game said strong demand for new video games such as Call of Duty: Black Ops and FIFA 11 helped it deliver an improved sales performance. The company saw UK and Ireland like-for-like sales declines narrow to 0.5% in the five weeks to January 8 from a 7.6% drop in the previous 18 weeks.