Festive sales surge lifts gloom from the high street

Fears that higher interest rates would lead to a poor Christmas for retailers have been allayed by a crop of upbeat trading statements from stores groups. Most show that while December started slowly, shops were rescued by a late surge in consumer spending in the final days before Christmas. Nigel Cope and Andrew Yates report on yet another year when shoppers left it late.

The high street was given a boost by buoyant trading statements yesterday by a wide range of retailers including Signet, the H Samuel and Ernest Jones jewellery retailer, JJB Sports, and Majestic Wine Warehouses, the off-licence group. Following better than expected figures from John Lewis and Burton, analysts said the worries over Christmas "bloodbath" had proved unfounded.

Richard Hyman of Verdict Research said: "Christmas did arrive late but this trend is well established. Lots of people took the last week before Christmas off work and did their shopping then. It won't be a bonanza Christmas but it will be solid."

However, he warned that 1997 would be seen as the high water mark for high street fortunes in the 1990s as higher interest rates took their toll. "The slowdown has begun and we think that it will continue throughout 1998." He said some retailers would have experienced a difficult Christmas with fashion groups said to have had the toughest time.

There was little caution in the air yesterday, however, as Signet led the way with an optimistic message that it would now exceed its profit expectations for the year.

The former Ratners jewellery group reported that in the nine weeks to January 3 like-for-like sales increased by 8.3 per cent in the same period last year. It said it now expected to "comfortably exceed" market expectations for its full year profits. Analysts have now upgraded their forecasts from around pounds 60m to pounds 65m and the shares rose 3.5p to 33.25p. The smaller, more upmarket Ernest Jones chain led the way while sales at the more mass- market H Samuel chain rose by only 1.7 per cent in the period. Signet chairman Jim McAdam said sales of diamonds, silver, gift products and wristwatches had been strong.

"The build-up to Christmas was generally slower than predicted but there was a late surge. We held our nerve and didn't start discounting so we were able to maintain our margins."

JJB Sports, the fast-growing sports retailer, continued its good run with sales in the 6 weeks to 28 December ahead by 10 per cent. This excludes new openings. David Greenwood, financial director, said Adidas had proved the best performing brand of the year, edging ahead of Nike. He said JJB's sales had started strongly in early December but, in contrast to most other retailers, tailed off slightly in the last two weeks. Sales picked up again after Christmas.

Wine sales have also been buoyant over Christmas. According to Majestic Wines, the wine warehouse operator, the feel good factor has made champagne and red wines very popular over the festive period. Tim How, chief executive of Majestic, said: "Our red clarets have been our best sellers. I believe wines are continuing to sell well across the industry. The strong economy ... and the trend for men to switch from beer to wine explain the growth."

Majestic Wines said sales were up by one-fifth in the last eight weeks of the year, with like for like turnover up 10.9 per cent. The strong trading performance helped Majestic shares rise 20p to 421.5p yesterday.

However, the group denied reports that is had been subject to a pounds 65m takeover offer. "It is a lot of rubbish. We have not had any offers or approaches. The idea of a bid for just pounds 65m is insulting," Mr How said.

Two other retailers also reported upbeat sales messages yesterday. Merchant Retail Group, which operates perfume shops and department stores said it sales were ahead by 14 per cent on a like for like basis in the 13 weeks to 27 December. TJ Hughes, the discount department store operator said its sales were up by 18 per cent in the five weeks to 3 January.