Britain's white Christmas: assessing the impact

It’s the first question on most operator’s lips at this time of year: how was it for you? The December trading period is a crucial time for pretty much every consumer–facing business. The bout of challenging weather in the midst of this frenetic trading period is widely expected to have had a debilitating effect on trading figures across the retail and leisure lanscape. There was a good deal of angst evident in the retail sector last week as scores of companies including Clinton Cards, HMV, Mothercare and Next all lamented Britain’s white Christmas. There were bright spots too however, with John Lewis posting sparkling figures along with JD Sports and a clutch of supermarket groups. The car industry also last week blamed the December blizzards when an anticipated rush of sales to beat the January VAT rise failed to materialise. In fact figures compiled by the Society of Motor Manufacturers and Traders revealed that sales of new cars slid 18% against 2009. Of course, it is obvious that in this sector the snow wreaked havoc in what was to be the coldest December on record. As D&D London’s Des Gunwardena pointed out if your customers can’t physically get to the restaurant, you can’t take the money. “You can’t eat a meal online,” he said. In a similar vein, Stonegate’s Ian Payne said: “It is not like shopping where if you can’t go one day, you go the next. If you don’t go out to the pub, you don’t go.” For most it seems that the first two weeks of December were very challenging, if not cataclysmic, culminating in the Saturday before Christmas being a nightmare. Things then gradually improved, with very strong trading between Christmas and New Year, which has continued to some extent into January, helped by weak comparatives. The biggest casualties of snow were destination pubs, particularly those in rural locations, and casual dining restaurants in retail locations cut off by the snow. Peach Pub Company co-founder Lee Cash said the company got "hammered" on the Saturday before Christmas (18 December) with all of its party bookings being cancelled. "It was tragic," he said. "The phones were ringing off the hook with cancellations." However, Cash was hopeful most would re-book for January and was happy with the overall performance with a strong Christmas Eve and New Year's Eve. Some pub companies that M&C spoke to last week spoke of the frustration of being able to get deliveries to country pubs – in spite of the snow – where there were no customers, and not being able to get deliveries to town centres because of traffic conditions – where there were still lots of customers. The bad weather saw some of the country’s biggest retail destinations, such as Bluewater, Lakeside, Meadowhall and Westfield badly impacted. Bluewater was shut for a number of days amid its biggest trading weeks of the year. Operators reported strong regional variations with those in areas of the country not too badly affected by inclement weather doing best. While the first half of December trading was hit by the snow, operators saw a strong recovery in trading between Christmas and New Year across the sector, something that YO Sushi’s Robin Rowland put down to pent up demand and snow-induced “cabin fever”. And it seems that a good number of companies in the eating and drinking out market remain positive over current trading. Although December is expected to produce like-for-like sales down across the sector, with analysts predicting falls of up to -15%, many operators believe they will emerge from the two-month period of December and January in neutral or positive territory, given the adverse weather that hit much of Britain in January last year. Despite major travel hubs being affected, several London operators have reported strong trading in December, which would have been even better but for major snow events. Wales, The Midlands and parts of the North were the areas worst hit. Novus Leisure, which operates 40 large-scale venues, predominantly in London, is set to report significant like-for-like sales growth while D&D London said underlying sales were up 3%, although it estimated the snow wiped out an extra 5% of sales. Be At One, the cocktail bar operator, said like-for-like sales were up 10% at its 10 London venues during December. Novus’s Steve Richards: “It’s really pleasing although, like last year, we are mindful that it could have been so much better had it not snowed.” It has to be said that London operators were lucky. Even in the snow London faired better than the rest of the country. The vagaries of the weather mirror what has been happening for much of 2010 with a performance gap emerging between London / the South East and the rest of the country. An extensive document compiled by Mark Brumby’s Langton Capital, and seen by M&C Report, on recent trading in the market includes a section devoted to the December chill. In it Brumby notes that some venues in snowed under parts of the country, like Birmingham and Bangor, were down 70% the Saturday before Christmas. Brumby said: “Towards the end of December, many operators believe they got a taste of what could have been. Like-for-like sales in general for the end of the month rallied strongly and, though an element of it would have been down to underspending earlier in the month, pubs and bars generally performed better than last year, leaving the more fortunate operators just into the black for a month that most had written off.” The 17-page document is available to purchase via Langton Capital. Weather is, and always has been, a huge deal for retail and leisure business, but the key question is whether it now needs greater consideration as a disruptive part of the business mix. This is the third year there has had some element of snow bringing the country to a standstill. It is also easy to forget how hot it was in April and May of 2010 – a hot snap that badly impacted people’s appetite for eating out. In a separate note Douglas Jack of Numis said of the crucial festive trading period: “There has been a large variance in performance. Overall, residential outlets outperformed those in city centres (concerns travelling home) and rural locations (difficulty driving). “The exception to this rule was London and the South (excluding Kent), where the snow had less of an impact. We expect snow to have taken 5% off like-for-like sales in December. “With the Peach Tracker up an average of 0.9% per month between February and November 2010, this would imply about -4% for the largest companies in December. However, the quoted operators, with above-average orientation to value pub food and London, entered December on the back of autumn like-for-like sales up 2.8% on average. If current normal weather conditions continue, much of December’s shortfall should be recouped in January, against easy comparatives.” The last sentence of Jack’s comments are telling – “if normal weather continues”. Let us all hope that the snow gives way for good to a prolonged bout of stunning and sunny winter weather.