“On the surface a 1% growth rate looks pretty modest. However, this performance compares very favourably to the results from other retailers and backs Asda’s assertion that it has seen faster than average growth across the period and has extended its market share.

“Asda’s credentials on price are long established and out of all the major grocers it is best positioned to take advantage of the more frugal consumer mindset by capturing the spend of those wishing to trade down. This has helped it win share from Tesco over the period and has also been beneficial in mitigating defections to the deep discounters.

“The most impressive improvements have been made at the premium end of Asda’s offer. In particular its partnership with Leiths to promote its Extra Special range over Christmas allowed existing consumers to trade up without going elsewhere. Going forward we believe there is significant potential for Asda to continue to grow the ‘best’ part of its range.

“After some difficulties last year, Asda now seems to be successfully straddling the quality-price equation and will, in our view, be one of the major beneficiaries from Tesco’s current difficulties.”

Source: Conlumino

“Sports Direct seems to have hit on a magic formula for sports retail, consisting of a relentless focus on large ranges, established brands and low prices. In a market where competitors such as JJB and Blacks have floundered, Sports Direct has hoovered up share.

“Having made its name as a value player, Sports Direct is now slowly developing credibility as a specialist. Large ranges and the addition of premium brands have helped it build authority; but, perhaps most importantly, it’s generous bonus scheme and increasing focus on training are reducing staff turnover. This will be a longer term win but will help ensure that the momentum Sports Direct currently boasts is successfully built upon.

With the Olympics and Euro 2012 taking place this year, Sports Direct can undoubtedly count itself among the current winners in UK retail.”

Source: Conlumino

“B&Q’s move to create a senior management structure around its operational divisions rather than international territories makes perfect strategic sense and fits in with the efforts the group has made to combine its sourcing and own brands across its core fascias, B&Q and Castorama, over the last few years.

“It is a shame to see Peter Hogsted leave the business, but we believe he can depart with his head held high, having driven international expansion plans and established Kingfisher as a formidable DIY player in key growth markets like Poland, Russia and China.

“Operationally the group had a solid final quarter, with Castorama performing strongly in France, Poland and Russia on the back of new store openings, new ranges and revamps to existing stores. Meanwhile B&Q’s total sales in the UK saw a marginal increase on the back of new space from acquired Focus stores. On a like-for-like basis sales declined, as would be expected in a market as challenging as DIY.

“In the year ahead we believe Kingfisher will focus more on developing trade formats like Screwfix, Brico Depot and trade counters at B&Q. These continue to perform strongly and help to balance the business against the vagaries of the retail DIY market.”

Source: Conlumino

“In many ways, Thorntons is a company at war with itself. On the one hand its commercial arm – which supplies supermarkets with chocolates – is pursuing a low value, high volume model which depletes margins but helps to secure market share growth. On the other hand its retail arm is attempting to improve the customer and store based experience in an effort to secure a slice of the premium chocolate market. The two strategies do not make for good bedfellows. Indeed, deep discounting within the commercial segment over Christmas inevitably lead to margins in the retail operating coming in below expectations.

“In light of this conflict, the decision to close up to 180 stores over the next three years is sensible. It recognises the fact that Thorntons currently has too much space and gives a clear indication that the company believes its prospects lie more in the wholesale than the retail market. On balance, we believe this decision is the right one: the brand has fallen too far to easily, and profitably, retake the premium ground and the competitive dynamics on the high street would make rebuilding it too much of a risk to take.

“Going forward, we believe that there will still be scope for some retail stores but these will be a much smaller part of the overall business. The main opportunities for Thortons are in the commercial and direct arms of the business. Its days as the specialist chocolate retailer are well and truly over.”

Source: Conlumino

“The fall in the rate of inflation and the direction of the trend is a welcome relief for consumers, who have seen their spending money under enormous pressure for the past two years.

“The rate will continue to fall throughout the year and some economists are even making noises about the prospect of deflation; indeed the fresh round of quantitative easing announced last week was partly a response to this concern.

“However, despite the improvement, current levels of inflation mean that disposable income is still being eroded, because average pay is not rising by anywhere near these levels. The long-term trend of food accounting for a growing proportion of the household budget shows no sign of slowing down and any increase in fuel could see inflation become more stubborn than expected.

“So, yes, this is positive news for consumers and the economy but it doesn’t alter the fact that this is going to be another tough year for retailers and shoppers alike.”

Source: Conlumino