The Retail Note - Xmas 2025: decent = ‘drab’

Key Messages

• BRC characteristically downbeat on Christmas trading
• Christmas 2025 dismissed as ‘drab’
• Total retail sales in Dec grew +1.2% year-on-year
• But against a strong comp last year (+3.2%)
• Food sales increased +3.1%...
• …but non-food sales were down -0.5%
• In-store non-food sales down -0.9%...
• …and online non-food sales also down -0.1%
• Every metric below 12-month averages
• Complete contrast to retailer trading statements
• Virtually every retailer ‘out-performs’ BRC growth metrics
• Official ONS retail sales figures released Fri 23 Jan
• Narrative and headline figures likely to be downbeat
• Underlying figures likely to be far stronger than reported.

Bing Crosbie sang wistfully of a White Christmas. Elvis lamented on a Blue Christmas. The BRC opined on a Drab Christmas.

Slightly less poetic than those crooners of yesterday, the BRC’s musings are unlikely to stand the test of time. But they are heavily influential in determining the immediate narrative of the 2025 Christmas trading period. The issue is, as it has been for a number of years now, the numbers and tone of the narrative totally contradict the messaging emanating from those that the BRC actually represent, the retailers themselves. As ever, much devil in the detail and more nuance in the, well, nuance.

Defining ‘drab’

Before dissecting the narrative, the hard BRC numbers. Total retail sales increased by +1.2% in December, below the 12-month average growth of +2.3%. Within this, food sales grew +3.1%, again below the 12-month average of +3.7%. Non-food fared even worse, with sales actually down -0.5% (vs a 12-month average of +1.1%). Within non-food, neither in-store (-0.5%) nor online (-0.1%) were in positive growth territory.

The accompanying narrative had even less festive cheer, the BRC highlighting that “growth slowed for the fourth consecutive quarter” and “that many people were clearly holding out for discounts, with the last week showing significant growth off the back of the Boxing Day and beginning of the January sales”. The latter statement seeming a bit tenuous, given that Black Friday promotions were all-pervading across the whole festive period, not just at the end of November. The notion of “consumers waiting for sales” as the BRC stated doesn’t really wash.

Some much-needed perspective: overall growth of +1.2% is slightly disappointing, but not disastrous. What would the UK government give for overall GDP to have grown by +1.2% in December? Would +1.2% monthly growth in the UK economy be described as ‘drab’? Also, the +1.2% growth was leveraged against a very demanding comp in 2024, when retail sales grew by +3.2%, Black Friday falling later in 2024 and effectively being rolled up in the December figures, rather than the November ones.

The grocery growth figure (+3.1%) was slightly lower than the Worldpanel one (+3.8%) but credible nonetheless. But the BRC was right to point out that there was “minimal volume growth” and for all the talk of inflation reducing, we are still not seeing this in supermarkets.

The non-food figures, on the other hand, stretch credibility. Here it is worth flagging that the BRC figures only reflect the retail sales contributions of its constituent members, rather than the entirety of the retail market (which, for all its faults, the ONS strives to do). Non-food sales were down -0.3% according to the BRC, yet the only retailers to date reporting a decline in UK sales over Christmas were M&S (in non-food) and Argos. In Retail Week’s helpful Christmas Trading League Table tracker, the BRC ranks third last of 28 ‘operators’ (moot point, it really should be second last as Primark’s performance should exclude its overseas operations).

A ridiculous situation in that all the constituents have performed better than the collective whole (the BRC). Either the membership of the BRC monitor is a silent, underperforming minority that doesn’t publicly release Christmas trading statements or it is disproportionately weighted to the underperforming ones that do (M&S, Argos). Or maybe there is still bad news still to come from other operators, which I doubt somewhat.

All in all, ‘drab’ is not disastrous. But it will no doubt also influence the ONS narrative when that comes out next week, when month-on-month figures are ‘seasonally-adjusted’ to present a picture that supposedly reflects reality. Or rather, an economist’s view of reality, rather than a retailer’s.

The alternative view from the horses’ mouth

Last week saw a plethora of releases from the largest retailers, especially the major grocers. This week there was a flurry of newsflow from some of the smaller operators – and, as already alluded to, the messaging has largely been postive. But, again, the key caveats remain and must be repeated:

1. Unlike full year and interim accounts, the statements are unaudited.
2. They are basically a vehicle for retailers to put out any message they wish. Retailers have free rein to select whatever reporting period they want and this can massively distort which numbers are released.
3. The statements are pre-occupied with sales and contain precious little information on profits.
4. Even the sales figures are gross rather than net. They will not take into account product returns, the proportions of which continue to escalate in a multi-channel retail world.

Perhaps unsurprisingly, TikTok Shop currently tops Retail Week’s Christmas ranking. The online platform reported a +55% year-on-year increase in sales in December, with the number of active sellers increasing by +60% in the final quarter of year. Such an immature business leveraging off a low base, growth figures were always going to be headline-grabbing and for all intents and purposes, will be for some time to come.

Beauty retailer Space NK currently occupies second spot, with sales growth of +26% over the festive period, with both stores and online seeing ‘incredible traffic and footfall’. Online sales rose +30% year-on-year, while store sales were up by +23%. The business was also incredibly bullish around Black Friday, that week surpassing its biggest sales week by nearly +20% (but at what cost to gross margin?)

ProCook, another relative newcomer to the retail arena, also achieved ‘record performance’. The kitchenware operator saw total revenue increase +28% to £32.8m in the 12 weeks to 4 January 2026. Like-for-like revenue increased by +17.2%. Again, a strong combination of in-store (+26.8%, +9.1% like-for-like) and online (+30%, +28.9% like-for-like) growth.

At the opposite end of the maturity spectrum, Fortnum & Mason (founded in 1707) achieved a sales increase of +16% in the five weeks to 24 December 2025. Online sales grew +23% on the back of investment in stock availability and a new distribution centre in Corby, while in-store like-for-likes rose +7%.

Upmarket Northern grocer Booths again reported a ‘record-breaking’ Christmas (as it seems to every year). For the three weeks to 3 January 2026, the business reported a +3.8% increase in like-for-like sales, or +4.9% for the month of December as a whole. This represented a third consecutive year of record Christmas sales growth and cumulatively sales have increased by +24% over this period.

Sosandar, which has topped Retail Week’s festive league table in previous years but has seen performance yo-yo since, returned to form last Christmas. The fashion retailer reported a +10% jump in revenue to £13.4m for the three months to 31 December 2025. E-commerce revenues on its online platform were up +27% year-on-year, but ‘encouraging performance through stores’ was the key driver in an improvement in gross margins from 64.7% to 66.0%.

Online health and beauty specialist THG reported revenue growth of +7% in the period to 31 December 2025, with its beauty arm delivering its best Q4 performance since 2021. Performance was driven by Lookfantastic, where sales climbed +16.2%. The nutrition division, which included Myprotein, posted revenue growth of +12.2%.

More modest growth at the much larger online business Very. For the six weeks to 27 December 2025, Very UK delivered retail sales growth of +1.9% year-on-year. Home was a standout performer, growing +7.9%, while Toys and Beauty increased +6.4%, reflecting continued consumer demand for gifting and lifestyle products during the peak trading period. However, at group level, including Littlewoods and Very Ireland, retail sales declined slightly by -0.4% year-on-year over the six-week period.

Decent sales but cautious narrative at toy specialist The Entertainer. Turnover was up +3.5% in the nine weeks to 3 January 2026, although, interestingly, the business was the first to explicitly make mention of consumers trading down, in terms of average transaction size. Trading also varied by location, with high street stores under-performing those in covered regional malls. The biggest contributions came from stores in Lakeside, Bluewater and Meadowhall, while city centre stores in Leeds, Bristol, Glasgow, Aberdeen and Plymouth ‘showed up very well’.

Private equity house Modella was quick to blame weak consumer demand as it put two of its other ‘acquisitions’ (Original Factory Shop and Claire’s) into administration early in the New Year, but Hobbycraft traded well despite growing question marks over its owners’ actual long-term commitment to the high street. In the six weeks to 28 December, total revenue was up +6.3% year-on-year. Online sales were up +13.8%.

Petcare specialist Jollyes reported a like-for-like increase in sales of +6% in the period from 1 to 24 December 2024. Total sales were up +10.4%, in part fueled by a flurry of new store openings at the tail end of the year, which saw seven new outlets open in quick succession in the final weeks of 2025.

The Perfume Shop saw total sales grow +1.6% in the month of December. The business shifted 1.58 million bottles of perfume between 30 November and 24 December, up +6% year-on-year. Gift set sales were up +4% and 23 December was the single biggest in-store trading day.

The only retailer to strike a less positive note was Dunelm. The homewares retailer reported a “solid” first-half performance but warned that tougher trading in the run-up to Christmas weighed on expectations for the full year. The business said total sales rose +3.6% to £926m in the first half, but over Christmas (13 weeks to 27 December 2025) sales growth decelerated to +1.6% to £498m. It highlighted that conditions became more challenging around Black Friday and into December, but maintained that it had remained disciplined on promotions despite heightened competition. As a result, Dunelm now expects full-year profit to come in at the lower end of market expectations.

Some perspective

All very drab? Anything but. A dozen or so retailers reporting on Christmas trading, each and every one of them reporting stronger sales growth than the BRC figures.

Next Friday (23 Jan) we get the definitive outcome on Christmas trading in the shape of the ONS retail sales figures for December / Q4 / FY 2025. Few will probably care by then, the underlying verdict now being that Christmas 2025 was ‘drab’.

And I don’t expect anything in the ONS narrative to contradict this view, even if it is divorced from reality. The ONS will undoubtedly lead on hugely seasonally-adjusted month-on-month volume growth figures, which may well show a decline. This will fit with the doom-and-gloom narrative and ensure that the ONS doesn’t look out of kilter. But jettisoning Christmas out of the December figures in the interests of ‘seasonal adjustment’ won’t be a reflection of reality. Seasoned retail analysts will focus on the year-on-year figures rather than the manufactured month-on-month ones and call out the limitations of any seasonal adjustment through analysis of the raw retail spend data. Watch this space…

‘Drab’? Pots, kettles. Greenhouses, stones.