Woolies disappointed with pre-Christmas sales

Woolworths today became the first major retailer to warn of disappointing sales in the weeks leading up to the Christmas rush.

The group said its core retail chain experienced lower footfall and sales levels in October and November compared with previous years.

It added it would need a sales uplift over the remainder of the Christmas trading period in order to achieve financial results at the lower end of City expectations.

• Shops facing worst-ever Christmas run-up

Woolies, which does around two-thirds of its business during the second half of its financial year, said like-for-like sales were down 6.5 per cent in the 18 weeks through to last weekend.

It said the fact that Christmas Day falls on a Monday this year means there is an extra weekend for shopping, which may result in business coming later than usual.

A statement to the stock market said: "We still have the key Christmas trading weeks to come which will determine the final outcome for the year."

It added: "However, given the sales performance of the last two months, it is appropriate to be cautious."

Woolies said the most challenging market had been the entertainment sector, with retail prices materially below last year.

Sales of seasonal Christmas products have been slow, but with strong demand for toys, it added.

Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said: "This is a big blow for Woolworths as traditionally its results are skewed towards the end of the year and Christmas in particular.

"As well as it being a tough marketplace, Woolies faces severe competition from the supermarkets and from online operators such as Amazon."

Despite the falling sales, the 97-year-old group remains the UK's eighth largest non-food retailer.

Woolies said in September that there was still "all to play for" in terms of Christmas, even though pre-tax losses for the first half of the year widened from £36.2 million to £66.8 million

As part of plans to revive the one-time retail giant, Woolies has sought to turn itself into a store for "kids and celebrations".

It has also launched the 528-page Big Red Book in a determined effort to take on Argos and Tesco in a "catalogue war".

Woolies said customer response to the Big Red Book had been "very encouraging" with multichannel sales up by 160 per cent on a year earlier and now accounting for 7.5 per cent of business - well ahead of budget.