January, good month/bad month

With January done and dusted, Retail Technology Innovation Hub brings you the month’s winners and losers

Good month for…

PayTech venture, Thyngs, has landed two heavyweight backers. Founder of Tossed, Vincent McKevitt, along with the company’s Financial Director Neil Sebba, has injected an undisclosed amount of cash into the company, as part of a £300,000 crowdfunding round launched in early January.

Asos beat forecasts for sales growth in the Christmas period. The fast fashion e-tailer reports that total retail sales rose 30% to £790.4 million in the four months to 31st December (analysts had been predicting growth of 27.4%). UK sales were up 23% and international 35%. The number of active customers was 16 million, a rise of 19%). 

Tesco says that hundreds of thousands of customers used its Tesco Pay+ mobile payments app throughout the Christmas period. In total over eight million transactions have thus far been processed across the grocery giant’s estate.

Pets at Home has boosted revenue in its fiscal third quarter by 9.6% to £223.3 million, with merchandise revenue up 9% to £193.4 million, including omnichannel revenue 77% to £13 million. Services revenue, meanwhile, increased by 13.6% to £29.9 million.

A stellar Black Friday performance helped fast fashion e-tailer Boohoo achieve record revenues for all its brands in the four months ending 31st December.

Boohoo was up 25% YOY to £142.6 million, with year-to-date revenue at £324.4 million, up 34%. PrettyLittleThing weighed in with £73.8 million, up 191% on the prior year, and Nasty Gal with £11.9 million. The pureplay, which has seen its share price jump more than 170% since it floated on the London Stock Exchange in 2014, said revenues should grow 90% for the year to February, ahead of its previous forecasts revised in September and June. 

Mahmud Kamani and Carol Kane, Boohoo joint Chief Executives, said: "The Black Friday period was our most successful ever and we traded well throughout the period under review. boohoo has continued to perform well, delivering strong revenue growth on increasingly challenging comparatives last year. PrettyLittleThing has continued to deliver exceptional results and Nasty Gal is making excellent progress in its first year. Our focus remains on the customer proposition: offering the best range of the latest fashion at affordable prices, coupled with great customer service.”

Omnichannel fast fashion womenswear retailer, Quiz, reported a 31.9% YOY increase in Group revenue for the seven-week period from 19th November to 6th January. 

Lidl announced plans to build its largest warehouse in the UK, servicing its growing estate of London stores. The German discount retailer’s new distribution centre at J11A of the M1 near Houghton Regis, Bedfordshire, will be more than double the size of any existing UK facility and will create up to 1,000 new jobs. Part of Lidl’s plan to invest £1.45 billion in Britain in the next two years, the one million square foot warehouse will be its 16th on these shores.

Lidl currently has 690 stores in the UK and plans are afoot to open five new London stores in the next two months - in Shepherds Bush, Walthamstow Central, South Ruislip, Hornchurch and Rosehill – with further five warehouses in the works. Director for Expansion and Development, Ingo Fischer, says: "With five new stores opening in the next two months alone, and further store expansion and development plans in place for the Greater London area across the new financial year and beyond, this new warehouse is vital in supporting our ambitious expansion plans in and around the M25."

Ted Baker saw its retail sales rise 9% YOY in the eight-week period to 6th January. Online sales surged by 35%, representing 30.1% of total retail sales. Average retail square footage rose by 5.9% to 409,226 sq.ft as the Group opened a new store in Montreal, with further concession openings in Germany and Spain and with its licence partners, an additional store in each of Malaysia, Mexico and Qatar.

Majestic Wine announced that underlying Group sales for the 10 weeks to 1st January increased by 4.1% YOY. Sales at its Naked Wine business, acquired in April 2015, rose 13% over the Christmas trading period, although Majestic Commercial, which supplies wines to pubs and restaurants, slumped 4.6% in the face of intense competition from pureplays and discounters like Aldi and Lidl UK.

Rowan Gormley, Chief Executive, comments: “The team performed brilliantly. The fact that we have been able to grow sales and maintain margins shows that our winning formula of fabulous customer service from delightful people and delicious wines at fair prices works even when times are tough. We are on track to achieve our £500 million sales goal by 2019, on track to deliver market expectations for the current financial year, and on track to accelerate investment in new customers, new winemakers and more fantastic wines.” 

Sainsbury’s took to Twitter to address a viral meme involving a Puma jacket being sold on Asos. Lots of people, including the retailer’s employees, had been flagging up on social media that this looked like the Sainsbury’s staff uniform. And the grocery giant itself joined in, tweeting a mock Asos fashion shoot with the caption: ‘No need to spend £70, work with us and get the original burgundy fleece for free’. It also included a link to the jobs section of its website.

A Sainsbury’s spokesperson said that the models in said shoot were members of staff and added: "We love our uniforms and it’s great to see other people like them too." Meanwhile, a not amused Asos responded on Twitter ‘*quits trying’ and, addressing a customer who didn’t get the gag, grumbled: ‘We didn't think it was funny either, but you can shop the look here’.

It was a record festive period for Poundland, with like for like sales in the three weeks to Christmas up 6%. 

Madame Tussauds scored a social media hit, poking fun at Donald Trump for abandoning plans to open the new US embassy in London.

Its waxwork figure of the US President made an appearance outside the building on Friday, 12th January with the company tweeting: ‘Trump cancelled his visit so we stepped in! It was certainly a surprise for the workmen at the Embassy. #TrumpVisit’. Replies included: ‘Better add about 59 lbs to that wax dummy so it can more closely resemble the real dummy’ and ‘He should also have a cheeseburger in one hand and a diet coke in the other’.

It was also picked up by the mainstream media. "We woke up to the news as everyone else did in the country and thought it would be a bit of fun," the attraction's Claire Treacy told Sky News.

Dunelm reported that comparable sales rose 3.4% in its second quarter, comprising the 13-week period ended 30th December. Helped by YOY online growth of 30.5%, revenue was up 13.6% to £297.5 million. 

"After a good first quarter, it is pleasing to see our sales momentum maintained with total sales growth, and like-for-like sales growth, of 13.6% and 3.4% respectively in the second quarter. This performance is driving our continued market share gains,” says Andy Harrison, Dunelm Chairman. "Continuing rapid like-for-like online growth, of 36.8% in the first half, coupled with passing the first anniversary of the Worldstores acquisition, has helped our online sales grow to 16% of total sales in the first half (18.5% including Reserve and Collect). We are well on the way to becoming a genuine multi-channel retailer.”

Bad month for…

A major blow for PayPal, with eBay announcing a new primary payment processor, Adyen. PayPal has been eBay’s main payments provider since 2003 and from 2003-2015 was a subdivision of the company. The contract accounts for roughly 13% of its total payments processed. 

Red faces all round at Overstock.com, which allowed customers to pay with either Bitcoin or Bitcoin Cash interchangeably. It was embarrassing because Bitcoin and Bitcoin Cash, which split off from one another last year, have wildly different valuations.

H&M…Canadian singer and record producer, The Weeknd, severed ties with H&M after an image of a hoodie-wearing black child, accompanied by the slogan “coolest monkey in the jungle”, appeared on its UK website.

The retailer received a fierce social media backlash, with people slamming it as “offensive”, “irresponsible” and “racist”. An H&M spokeswoman said: “This image has now been removed from all H&M channels and we apologise to anyone this may have offended.”

The Weeknd, who has a clothing line with the retailer, tweeted: "Woke up this morning shocked and embarrassed by this photo. I'm deeply offended and will not be working with H&M anymore." He first teamed up with H&M in 2017, modelling in ad campaigns and collaborating on pieces for his XO brand. 

Debenhams warned on annual profits after a disappointing Christmas. The retailer said full year profits would be in the region of £55 million to £65 million. Analysts had been expecting £83 million. Like-for-like sales in the UK fell 2.6% in the 17 weeks to 30th December. Things picked up over the six-week Christmas period on the back of discounting (like-for-like sales were up 1.2%), but the first week of the post-Christmas sale was below expectations.

Marks & Spencer saw like-for-like revenues fall 1.4% in the 13 weeks to 30th December. Clothing and homewear slumped by 2.8% and food, usually the retailer’s star performer, by 0.4%.

M&S Chief Executive Steve Rowe said: “We had a mixed quarter with better Christmas trading in both businesses going some way to offset a weak clothing market in October and ongoing underperformance in our Food like-for-like sales.  As a result, full year guidance remains unchanged.” 

The poor performance closely followed the announcement of a new technology transformation programme as the struggling retailer looks “to become a digital-first business and deliver an improvement in customer experience”. Rowe commented: “We continue with the accelerated transformation programme we outlined in November and have recently taken several important steps to reshape the business for the future. These include a new technology partnership and organisation, and the sale of our Hong Kong based business in line with the streamlined franchise-led model we are adopting for International.”

Tesco was forced to announce a grace period on changes to its biggest Clubcard rewards, following an angry response from customers on social media.

The retailer had previously said that vouchers worth four times their face value would be cut to three times their value, with more than 100 scheme partners as the standard offer. That signalled the end of some of the most popular deals, such as meals at Pizza Express, Prezzo and Zizzi. A Tesco spokeswoman commented: "We've listened to our customers and simplified our Clubcard Reward Partners so that they're more straightforward for everyone. This means that from 15th January, we will offer customers three times the value of their vouchers with over 100 Clubcard Reward Partners including days out, weekend breaks, holidays and more. This builds on the work we did last year to further help customers, when we introduced the new contactless Clubcard and made significant improvements to the Clubcard app."

Tesco has around 16 million active Clubcard customers. One grumbled on Twitter: "We had £89 saved up in vouchers - worth £356. Now they are worth £267. No advance warning, really really poor from @Tesco £tescoclubcard - been loyal Tesco customers for well over 10 years - because of clubcard. And what a load of BS about 'making it easier'."

It is now delaying changes until 10th June to give shoppers more time to adjust, noting that it had "listened to customers' feedback".

Waitrose customers were unable to pay by card on the evening of Tuesday, 16th, as the Verifone payment system crashed.

Customers across the UK took to social media, saying that stores’ card systems had gone down and they had been asked to pay with cash. A Waitrose spokesman said: "We were among a number of businesses impacted by intermittent failures to Verifone's card payment system. The situation has been resolved, however we are very sorry to customers for the inconvenience."

Verifone commented: "Earlier on Tuesday, we experienced a service outage that affected connectivity to our Wynid gateway in France, and Ocius gateway in the UK. Services are now back to normal, and both datacentres are now receiving transactions. Our engineers are continuing their investigation to determine the root cause of the outage. We apologise for the disruption caused.”

70% of Swedish retail chains are facing major challenges with the new EU General Data Protection Regulation (GDPR), according to research by ID24.