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High Street Stores Poor Christmas Profits Lead to Great January Bargains

January 9, 2018, 8:00 AM
  • Big name brands are struggling after a bad 2017
  • Mothercare, M&S, and Debenhams have all issued profit warnings
  • Online shopping overtakes high streets at Christmas
  • Stores launch huge sales to make up for falling profits
Boxing Day sales failed to get shoppers to spend in 2017. Image: Getty

Major retailers have issued profit warnings after a poor performance at Christmas, but this could mean good news for bargain hunters.

Mothercare, M&S, and Debenhams have all struggled to increase their profits over Christmas after bad sales figures in 2017, and are now offering huge sales to compensate for their losses.

Mothercare saw its’ sales fall 7.2% from last year, which prompted the brand to make up to 70% discounts on end of season stock.

Mark Newton-Jones, Mothercare’s Chief Executive, said, “We took a conscious decision to remain at full price prior to Christmas, but we are now offering heavier discounts in the end of season sale.”

Mothercare’s sale has been popular with members of the Latest Deals bargain hunting community.

Michelle Collins said, “I recently used Mothercare’s sale to sort out our nursery bits.

“I got a full cot set up, mattress, top changer, and drawer underneath for £200 - a great bargain!

“It’s all really good quality, but I wouldn’t buy from there unless it was in the sale.”

Mothercare has seen slightly better sales figures online compared to in store; figures fell by 6.9% there, following the trend of online sales beating the high street.

Debenhams also suffered from poor sales over Christmas.

Its’ sales in the run up to Christmas fell 2.6% compared to the previous year, which it blamed on a highly competitive market.

Sergio Bucher, Debenhams’ Chief Executive, said, “The market has been challenging and we have responded by lowering prices in order to remain competitive for our customers, which has impacted our profit performance.

Debenhams has lowered prices by up to 70% as part of its' Blue Cross savings event, which has been extended until the 28th of January, in an attempt to encourage customers to shop there.

It also started its’ Boxing Day event on Christmas Eve to get last minute shoppers through the doors.

Debenhams' poor customer service and increase in prices are some of the reasons why shoppers have spent their money elsewhere in 2017.

One bargain hunter, Kathryn Ann Stannard said, “Personally, I do a lot of my shopping online.

“You have the power of the web to search for the best deals, and you avoid the nightmare of busy shopping times on the high street.

“I don’t tend to shop at Debenhams anymore as its’ customer service is appalling, I’ll only look at its’ website during the sales.”

Shoppers can also save money online, as some stores put better discounts online rather than in high street shops.

Another savvy shopper, Thomas Craigie, said, “Debenhams lost its’ way many years ago.

“It tried to go more upmarket, but I personally find it far too expensive for what it sells.

“It’s prices, perhaps inadvertently, are sometime on par with upmarket brands like John Lewis, and of those two retailers, who would you shop with?

“Apart from John Lewis or Selfridges, I think the days of department stores are numbered.”

Despite a successful Christmas, Poundland has also reported issues in its’ sales figures.

Poundland’s controversial Elf on a Shelf Christmas adverts led to a boost in profits (despite now being faced with an ASA investigation).

Over 200,000 of the Elf toys were sold in the lead up to Christmas, as well as over a million accessories for the Elf.

However, the brand faced strong criticism and poor sales throughout the rest of 2017.

It recently had to get a £180 million loan from American investment firm Davidson Kempner, in order to replace an investment from South African company Steinhoff.

Steinhoff is currently under investigation for a £5.3 billion accounting scandal.

It also changed its’ pricing, from always costing £1, to certain products costing up to £5, which lost the appeal for many shoppers.

One dissatisfied bargain hunter, Heather Stevens, said, “I think Poundland really lost its’ charm by adding lines that are more than a pound.

“The main draw was that everything was a bargain, but now it’s just like any other shop, so I certainly don’t go there as much.”

M&S, who will release its’ Christmas figures later this week, are predicted to be another shop that had a bad sales year.

The department store, which has been struggling with poor figures, is expected to have a similarly poor year to Debenhams.

Retail analysts have blamed the poor sales on M&S’s attempts to reduce costs by getting in poorer quality products.

Richard Hyman, an independent retail analyst, said, “The average M&S customer is not interested in getting an inferior product for lower prices.

“They would rather pay a bit more to get something relevant and of decent quality.”

Bargain retailers have also threatened traditional high street stores.

Aldi had a record breaking 2017, as it saw sales top £10 billion, while B&M and Home Bargains are also predicted to have strong sales from 2017.

What does this mean for you?

Poor sales from big, and more expensive stores, means that you could get some great bargains.

Other stores are expected to follow in the footsteps of Mothercare, by offering huge end of season sales to shift old stock, so bargain hunters should hold off until the end of a season before buying from a department store.

The growth of cheaper stores, like Aldi and B&M, is also good news for savvy shoppers.

As seen with Debenhams, who lowered its’ prices to match competition, shops will lower the prices if customers start shopping elsewhere.

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