Retailers have offered some Christmas cheer – but the real tests are to come

After a long cold snap, planet retail does seem to have enjoyed some sunshine over Christmas. At least parts of it.

Next got the ball rolling, reporting balmy sales, and upgrading its profit forecast. But Next regularly outperforms – because it’s a very well-run operation.

However, a shopping basket full of festive trading updates, including missives from Sainsbury’s, JD Sports Fashion, and furniture seller Dunelm, showed it was far from alone.

All of them touted fine sales and upgrades to their profit forecasts, which had the City’s scribblers scrambling to update theirs too.

All three have their fans, and they have all in the past shown that they are capable of exceeding expectations, notwithstanding the occasional self inflicted wound such as Sainsbury’s obvious train wreck of a bid to merge with Asda.

That’s particularly true of JD, which has been a stock market darling – despite its wrangles with the Competition & Markets Authority and pugnacious boss Peter Cowgill’s occasional courting of controversy.

You’ll get forgiven a lot if you can prove you’re as sharp a retailer as Cowgill is. He’s also demonstrated that it is perfectly possible for a UK outfit to succeed in the US. Which is a rock on which numerous peers and rivals have floundered on over the years.

This is not so true of Topps Tiles. A star – of any kind – it isn’t. A cursory glance at its share price graph will show you periods of hill climbing followed by what looks very much like Base jumping.

Yet even the flooring specialist managed to report decent sales, plus it is handling the government-created supply chain issues well enough. It even managed to talk about “sustainable growth” in future, although margins are getting squeezed (no surprise there).

Can the sunshine last? That’s the big question. It’s quite possible to make an investment case for Sainsbury’s, JD and Dunelm, despite the many headwinds retailers are facing, not least the cost of living crisis a government of staggering incompetence has no ideas for how to tackle.

Sainsbury’s sells an essential product, is perennially the subject of takeover rumours, is tolerably well run, pays a nice divvy. JD is flogging exclusive lines of trainers globally. Dunelm has a reputation for value, which ought to serve it well in the midst of said crisis.

Topps? Well we’ll see, which is a question being asked of lots of its retail peers too. Thursday may offer some answers. It’s “super Thursday”, when there will be more retail trading updates than there are special offers in your average Sainsbury’s.

It’s thus a very good day for CEOs to bury their companies’ bad news. And there will be some that have to report it, whatever they use to flatter their results (offering multiple years to compare with, “adjusted numbers” – you know the drill).

But, really, the past is far less important than the future. It will be what they have to say about the outlook that the City is really looking at, and how they’re going to manage their businesses when their customers have less money in their pockets.

Christmas might have been sunny but the forecast is for fog, and perhaps a freezing fog.

These are the sort of conditions that provide CEOs with the opportunity to prove they are at least partly worth the absurd sums of money they pay themselves. Some – such as Cowgill – may do that.

However, it’s worth remembering, at this point, that the High Pay Centre declared High Pay Day 2022 fell on 7 January, just before 9am. It is the point at which the average FTSE 100 CEO’s pay for 2022 surpassed the earnings of the median UK full-time worker

The failures over the next year will trot out a Boris Johnson of excuses – I think that’s a nice new collective noun in the wake of recent events, don’t you? But people are tiring of the prime minister’s. They really shouldn’t accept them from business leaders either.