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UK retail sales see worst year on record in 2019, data shows

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Marks & Spencer Group has been trying to turn around its business for the past decade. It expects gross margins around the lower end of its guidance for the year.

London

RETAIL sales in Britain posted their worst year on record in 2019, as Black Friday overtook Christmas as the biggest shopping week of the year and political uncertainty weighed on confidence, the British Retail Consortium (BRC) said.

The value of goods sold posted an unprecedented decline, falling 0.1 per cent compared with a 1.2 per cent increase in 2018, the lobby group said in a report published on Thursday.

The figures for December alone were boosted by Black Friday, which fell a week later than it did in 2018. Taking November and December together, sales fell 0.9 per cent from a year earlier, with like-for-like sales declining 1.2 per cent.

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The report came as three of the UK's biggest chains issued gloomy updates. Marks & Spencer Group Plc, Tesco Plc and John Lewis Partnership Plc all suffered from an increasingly tough retail environmental marked by intense promotional pressure and political turmoil as parliament remained deadlocked over Britain leaving the European Union.

"Twice the UK faced the prospect of a no-deal Brexit, as well as political instability that concluded in a December general election - further weakening demand for the festive period," said Helen Dickinson, chief executive of the BRC. "Retailers also faced challenges as consumers became more cautious and more conscientious." The survey was carried out between Nov 24 and Dec 28. In the fourth quarter, same-store sales fell 0.9 per cent, with food sales stagnating and spending on other goods dropping 1.6 per cent.

Marks & Spencer Group Plc said it expects gross margins around the lower end of its guidance for the year after holiday sales at its long-struggling clothing and home unit were weaker than the consensus.

Tesco Plc's revenue dropped on a comparable basis as a weaker performance in central Europe masked growth in the UK that came ahead of expectations. Food also performed better at Marks & Spencer.

Adding to the downbeat tone, John Lewis Partnership Plc warned that it might not pay a bonus to its employee-owners after a drop in revenue. Paula Nickolds, the managing director of its department store division, is leaving.

M&S's outperformance in food stems from investments in the product range and price cuts. Menswear and lower gift sales held back the clothing unit.

The company has been trying to turn around its business for the past decade, and its latest efforts are being led by chairman Archie Norman and chief executive officer Steve Rowe.

Mr Rowe said the weakness in Christmas sales are largely due to one-time issues such as the menswear performance and waste in the food unit. "The changes we made earlier in the year in clothing have arrested the worst of the issues of the first six months and we are progressively building a much stronger team for the future," he said in a statement.

Next Plc, the first retailer to update the market last week, also beat market expectations.

The departure of Ms Nickolds at John Lewis follows that retailer's decision announced in June to name UK former telecom regulator Sharon White as its next chairman. The company's department-store operations have been hit especially hard by the growth of Amazon.com Inc and other online retailers.

"In a subdued UK market, we performed well, delivering our fifth consecutive Christmas of growth," said Tesco CEO Dave Lewis, who will be leaving the grocer this year. BLOOMBERG