After a tough year for retail, the Christmas period saw a surge in sales for many UK retail companies. Two long years of Covid-disrupted festivities has seemingly left consumers itching to get back into retail stores, reflected in December footfall reaching its highest level since the start of the pandemic. Overall, UK retail sales increased 6.5% on a like-for-like basis from December 2021, when they had increased by just 0.6% year-on-year. 

Recent stand-out retail updates include:

  • Clothing and home products retailer Next (NXT) saw full-price sales rose 4.8% year on year over the Christmas period, £66 million more than previously expected. 
  • Budget retailer B&M (BME) said like-for-like sales rose 6.4% in its key Christmas quarter. 
  • Card Factory (CARD) reported that sales rose to £432.6m in the 11 months to the end of December, up from £337.3m in the same period a year earlier. 
  • Electricals retailer AO World’s (AO.) shares rose by 6% in a bid to focus on profitability rather than sales growth.
  • In the three months to the end of December, Mark’s Electrical’s (MRK) sales were up 33% to £29 million. 
  • Shoe Zone (SHOE) reported a large increase in annual sales and profits. Revenues in the 52 weeks to 1 October came in at £156.2m, a 31% increase from the year previously. 
  • Women’s clothing brand Sosander (SOS) reported a revenue increase of 30% (£11.6 million) in the lead-up to Christmas. 
  • JD Sports (JD.) reported total revenue growth of over 20% in the six weeks in the run-up to Christmas.
  • Sainsbury’s (SBRY) also announced strong sales figures. Total sales grew by 5.2% over the 16 weeks to 7 January compared with the same period last year.
  • Flooring specialist Topps Tiles' (TPT) quarterly sales rose by 10.2% in the 13 weeks to 31 December. 


View from Vox

After heavy falls over the last year, many companies in the sector have enjoyed a strong share price recovery in recent months, with the sector up by a third over the last three months. 

But while many UK retail companies reported strong sales figures over the festive period, the resurgence doesn’t necessarily suggest that retail is out of the woods yet. Royal Mail strikes in December forced a lot of consumers to shop in-store, which may not have necessarily been their preference and flattered footfall figures. According to data from Barclays, online sales fell 5.8 per cent in December, while physical retail spending grew and 6.3 per cent.

Another key factor to consider is inflation: sales values were up in December, but this was mainly because products cost more, not because consumers were buying larger volumes of products. For example, the British Retail Consortium reported that despite household appliances being the fastest-growing category of retail sales in December - to the benefit of AO and Marks Electrical -  this was largely down to higher prices rather than increased volumes. Sainsbury’s strong top line grocery sales growth of 7.1% also sits well below the level of food price inflation, at 13%. 

Moving into 2023, the cost of living squeeze could well mean that budget retailers, such as Shoe Zone - one of the few retailers to see its share price rise last year - and B&M, remain better positioned to deliver strong sales figures, particularly for essential products. 

For those selling less essential discretionary goods, the end of the conventional gift-giving season may seem them struggle to maintain the Christmas performance. Household finances remain under pressure, and the halo effect from housing wealth can’t be relied upon to drive spending as rising interest rates impact housing market activity and house price growth.  

Overall, Christmas wasn’t the disaster that some envisioned, but going into 2023, retailers will have to adapt their costs to protect margins against tightened consumer budgets after what could still prove to be a Christmas ‘last hurrah’.