Discounters boosted by the hunt for bargains

Cost-conscious UK consumers remained in the hunt for bargains over Christmas leading to strong sales increases at discount retailers Peacocks and Poundland over the festive period.

Cost-conscious UK consumers remained in the hunt for bargains over Christmas leading to strong sales increases at discount retailers Peacocks and Poundland over the festive period.

Peacocks, the budget fashion retailer, yesterday kicked off another busy week for retailer updates by announcing that like-for-like sales rose 8 per cent over the eight weeks to January 2.

Poundland, the UK's largest single price discount retailer, will today report a 4.4 per cent increase in like-for-like sales for the five weeks to January 3, as total sales climbed by 34.8 per cent fuelled by aggressive store expansion.

Over that period bargain-hunters bought 3m crackers, 1.1m Christmas cards, 1m packs of batteries and 10,500 miles of wrapping paper at Poundland, where each item costs £1.

Richard Kirk, chief executive of Peacocks, said an exceptionally strong Christmas period had resulted in total sales in the period rising 13 per cent and like-for-like sales growth of 17 per cent in December and early January.

"Customers decided they were going to celebrate after a year of doom and gloom," said Mr Kirk.

But Next warned retailers face a "sluggish" year as the need to cut Britain's debt burden threatens to derail a consumer recovery.

"We also went against the market somewhat in buying a lot of winter stock, and we sold it," said Mr Kirk.

Weak comparative figures, dress designs from singer Pearl Lowe modelled by her daughter, and delayed spending from October and November also contributed to the rise, he added.

Peacocks' online business reported a 70 per cent rise in sales in the period.

The figures indicated a stronger performance than some larger rivals such as Next and Marks and Spencer, which nevertheless last week reported the first underlying sales growth in their shops for two years as consumers appeared to shrug off economic gloom.

Peacocks is planning to step up the rate at which it is opening new stores, with about 40 planned for the year 2010-11, up from the 30 it will open in the year 2009-10. Poundland, with 254 stores nationwide, is expected to open a further eight stores by April.

"With more and more customers spreading the weekly shop across several stores to help their budget stretch further, we are confident that sales will continue to reflect this customer trend throughout 2010 and beyond," said Jim McCarthy, chief executive of Poundland.

Tesco, Home Retail Group, and DSG International are all due to update the market on Christmas and new year trading later this week.

~Article courtesy of The Financial Times