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Wednesday, January 11, 2012 IN ASSOCIATION WITH
the big feature
LIVERPOOL’S INVESTMENT SPECIALISTS
om and gloom
Howard Archer, chief UK economist at IHS Global Insight – welcome news to see any sign that the economy is growing
Retail is still the gloomiest corner of UK’s economy firms appear to be thriving in difficult conditions is that, while weak firms are struggling and even going bust, stronger businesses are mopping up the weaker firms’ sales. Construction firm St Modwen, which is developing the Great Homer Street area of Liverpool, recently revealed that it would have better than expected trading results for 2011. Soft drinks firm Nichols last week predicted a significant increase in annual profits as sales continue to beat targets. In a trading statement up to the end of December, the Newton-le-Willows firm, which makes the iconic Vimto soft drink brand, said it has maintained the “excellent momentum” reported at the half year, with sales increasing by 18% compared with the same period in 2010. This was ahead of the group’s own expectations and was achieved against strong comparatives in the prior year and despite the continued downturn in the UK economy. Nichols’s brands have out-performed the UK soft drinks market, while its international business continues to deliver
“significant year-on-year growth”. Despite raw material costs and inflation, as well as investment in promotional activity during 2011, the group said its operating profit margin will still be maintained “as a result of ongoing productivity improvements and tight control of costs”. Another thriving firm is Knowsley-based contracting firm IQA, which broke into the regional market last year when it set up a base employing 80 staff. Business has gone so well that it is now recruiting another 40 staff locally. DW Sports, which belongs to Wigan Athletic and former JJB Sports owner Dave Whelan, is in the throes of pumping £250m into a new chain of 100 fitness clubs. Mr Whelan said: “In this climate, some might think investing like this is brave and others might say it’s stupid. But the health market is staying vibrant. “It’s happening all over the world. People realise they have to keep the body in good condition. Whether it’s the USA, Mexico or Britain, people want to live longer. Our clubs have been very popular.”
‘The people least hit so far are investment bankers’
IT HAS been very hard indeed, over the last 12 months, to find any glimmers of light on Britain’s high streets. The Christmas and New Year sales period is always seen as vital, but it was even more vital than normal this year. So far, however, things have not been as disastrous as many had feared. The share prices of both Marks & Spencer and Debenhams rose 2% and 8% respectively yesterday morning after the retailers published better than expected Christmas trading statements. Sales at Marks & Spencer rose 0.5% in the last 13 weeks of the year and would have been better had the company not withdrawn from technology products. Debenhams enjoyed record sales in the week before Christmas but overall sales were flat in the 18 weeks to January. City analysts had anticipated a 2% fall. There was bad news from software retailer Game, which said it was set to breach banking covenants due to poor trading over Christmas. UK retail sales values were
2.2% higher on a like-for-like basis from December 2010, when sales had fallen 0.3%, hit by snow, according to figures published by the British Retail Consortium yesterday. On a total basis, sales were up 4.1%, against a 1.5% increase in December, 2010. On both measures and excluding Easter distortions, sales performance was the best since January. Food sales growth picked up strongly and non-food also improved, but with sales often promotion-led. Clothing and footwear showed good gains on last December’s weak sales. Homewares improved but big-ticket items and furniture sales remained down on a year ago, hit by consumer caution. Internet, mail-order and phone sales growth picked up sharply from November’s low. Sales were 18.5% up on a year ago, double November’s gain but similar to the 18.0% in December 2010. The rise in internet sales help Speke-based Shop Direct, which this week reported a 9% rise in Christmas trading.
■ SALES battle: Page 10
private business Rail firm on track and still in profit
RAIL equipment provider Faiveley Transport (Birkenhead) says increased sales in its customer services arm helped it maintain levels of profitability. Accounts newly filed at Companies House show Faiveley’s turnover for the year to March, 2011, stood at £27.4m – down 6% on 2010. Pre-tax profit fell 10% to £2.4m. The business, part of the French Faiveley group, supplies and services brakes and coupling equipment for trains. It said: “Even though sales are down, the profitability percentage has remained the same as the previous year. The decrease in turnover in the year has arisen due to a reduction in original equipment (OE) sales and phasing of some customer service (CS) sales. “The year ended March, 2011, was a challenging year in a difficult external economic environment.” “The order book, as at the end of March, 2011, is at the same level as the previous year with an increase in CS orders offsetting the more variable OE orders. This is in line with our strategic objectives.” Faiveley said it was on target with plans to grow its customer services business this year. It said: “The next financial year will again provide significant challenges for us with specific focus on securing new OE orders for Faiveley to support future customer services growth and to protect current business levels.” It added: “Continued focus on internal industrial performance, efficiency and on-time delivery specifically are of particular importance to support our competitiveness as the company makes every effort to maintain and improve profitability and market share in spite of the adverse external economic conditions.” ALISTAIR HOUGHTON