The Retail Note - Xmas 2025: so far, so decent

Key Messages

• Initial reporting suggests a decent Xmas for retail
• Grocery sales up +3.8% YoY
• Grocery retailers’ trading statements all strong to date
• Tesco’s UK like-for-like sales up +3.2%
• Sainsbury’s grocery sales up +5.4%
• Lidl (+10%) and Aldi (+3%) achieve “record Xmas sales”
• M&S food sales up +6.6% (+5.6% like-for-like)
• All increase market share at expense of Asda, Morrison’s and Coop
• All provide evidence of consumers trading up
• Next’s full-price sales rise +10.6%...
• …and it ugrades FY profit guidance by £15m
• Primark’s UK sales grow a creditable +3% (+1.7% like-for-like)…
• …but weak overseas (C Europe like-for-likes -5.7%)
• M&S non-food sales down -2.5% (-2.9% like-for-like)
• A legacy of the cyber attack in April 2025
• UK total footfall down -2.9% in Dec
• Footfall particularly weak in Shopping Centres (-5.1%)
• Footfall unlikely to be a barometer for retail sales performance
• BRC figures due next Tues (13^th), ONS not until Fri 23 Jan

So, there it was, a Merry Christmas, I hope everyone had fun. Here’s to the future, the retail analyst’s work has just begun…

Making sense of retail trading over Christmas is one of the most demanding parts of the job. So much data, so much newsflow, so much shouting. But so much of it conflicting and even downright contradictory. And the devil tends to find work for idle hands in the media industry at this time of year to boot. In fairness, this time around the media seem slightly less predisposed to totally write off Christmas as they have in previous years, perhaps in reaction to looking silly when the retailers themselves universally declare it a success.

With much more newsflow forthcoming over the next few weeks, this is what we know so far. Footfall was erratic (as you’d expect) but generally not strong. But, then again, footfall is a notoriously dubious metric in assessing actual retail performance. Actual performance is best measured through retail sales figures, but the more reliable of these have yet to be released.

But we do already have a good steer on grocery market performance (spoiler alert: decent but not outstanding) through Kantar data and trading updates from most of the major supermarket operators (Tesco, Sainsbury’s, Aldi, Lidl, M&S). But performance has been more mixed from the non-food operators reporting to date (Next, M&S, Primark, Argos).

Footfall disappoints

The media love footfall data on three counts. Firstly, it’s simple to comprehend, a count of bodies walking past a ticker. Secondly, it’s timely, giving a virtually a ‘live’ read on how busy high streets are (or aren’t) at even given moment. Thirdly, it usually paints a unduly negative picture which seldom tallies with far more important retail sales figures, which are invariably lagging. Simplicity, immediacy and negativity triumphing over reality.

Seasoned retail analysts are less fond of footfall data, simplicity actually bringing more nuance than it does provide clarity, particularly around deriving pure like-for-like comparisons. It is also surprisingly easy to over-analyse and misrepresent pretty blunt metrics. But more importantly, it is only one part of two-part equation – average transaction value (ATV) the other. Only by multiplying the two together can you get a true measure of performance.

These nuances / limitations were laid bare on the BBC on Boxing Day. Early reporting carried the headline ‘Boxing Day shopping falls flat once again’, only to be replaced later in the day with ‘Late shopping rush drives Boxing Day sales traffic’. Contradictory over-analysis of largely meaningless data.

For what they are worth, the BRC-Sensormatic data showed that total footfall was down -2.9% year-on-year in December (the period from 30 November – 3 January). Footfall was particularly weak in Shopping Centres (-5.1%), but not much better on Retail Parks (-2.5%) or High Streets (-0.9%). Over the extended Q4 period footfall was down -2.2% and for 2025 year as a whole -0.8%.

Grim figures. Read into them what you will. But I guarantee year-on-year retail sales will not be down at all, let alone to the same degree, as and when they are released.

Food retailers – decent growth, but largely inflationary

 A plethora of early newsflow on the grocery sector this week, from both 3^rd party industry sources and the retailers themselves. A far more reliable read on the performance of the retail market over Christmas and one that is mercifully consistent (as frankly it really should be as the 3^rd party is collating the data provided by the individual grocery retailers).

Worldpanel by Numerator (formerly know as Kantar) showed that consumers spent a record £13.8bn on grocery in the 4 weeks to 28 December, up +3.8% year-on-year. However, this growth was largely inflationary, with grocery volumes still very challenged (although perhaps not to the degree the ONS will suggest when they release their numbers). As we predicted, there was significant evidence of consumers trading up as much as down, with premium own-label lines surpassing the £1bn milestone for the first time and premium products finding their way into a staggering 92% of shopping baskets.

Predictably, the discounters saw some of the biggest share gains, particularly Lidl (+0.5ppts to 7.8%). But the two biggest players also gained share (Tesco +0.2ppts to 28.7%, Sainsbury’s +0.3ppts to 16.3%). Asda, Morrisons and the Coop were the only operators to lose share.

More colour from the retailers themselves, albeit with the annual strong caveat that retailer Christmas trading statements are by no means gospel and need to be taken with something of a pinch of salt. The key caveats remain:

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.

Almost as keen as they are to compete on the high street, Aldi and Lidl seem as intent on out-doing each other in being the first to release their festive trading statements. Predictably, both declared “record performance”, hardly surprising that both achieved “record” sales given their respective store bases continue to expand significantly. Anything but “record” performance would be tantamount to a total disaster for these two.

Lidl posted sales up +10% to £1.1bn for the four weeks to 24 December, while shopper numbers rose 8% to around 51 million. Frustratingly, no like-for-like figure was provided. But it did sell more than 30 million mince pies.

Aldi reported sales of £1.65bn in the four weeks to Christmas Eve, a +3% increase on last year (+5% in the week running up to Christmas Day). No read on mince pies from Aldi, but it did shift 56 million potatoes, 37 million carrots and half a million turkeys. That’s a lot of potatoes, carrots and turkeys. But again, no like-for-like figure. It would not be beyond the realms of possibility that Aldi’s like-for-like sales were actually negative over Christmas.

More detail, as you’d expect, from the mainstream grocers. Tesco’s affirmation of it achieving “its highest market share in a decade” perhaps carries more weight given its maturity, size and status as the UK’s largest retailer. In twin trading statements - one covering the 13 weeks to 22 November and another covering the six weeks to 3 January 2026 – the business reported a +3.2% increase in UK like-for-like sales over the festive period and a +3.9% jump in revenues in the third quarter. Fresh food (+6.6% like-for-like) provided the standout performance, while sales of Finest rose +13%. Like-for-like sales in home and clothing rose +2.1% in Q3, while online sales grew +11.2%, partly by virtue of extended Christmas Eve deliveries.

Sainsbury’s led on the headline that it had gained grocery market share for a sixth Christmas in a row. The business reported sales growth of +4.9% for the 16 weeks to 3 January 2026, with grocery sales up by +5.4% (with implied healthy volume growth). Trading during the final six weeks of the period was up by +4.6%. Online sales grew by +14% and there was further evidence of consumers trading up, with Taste the Difference sales up +15%.

Arguably, the best performance in food reported to date came from Marks & Spencer. Overall group sales (excluding Ocado Retail) were up +3.3% in the 13 weeks to 27 December. Food sales totaled £2,719m, a total increase of +6.6% or +5.6% on a like-for-like basis. Ocado Retail sales increased +13.7% on the back of volume growth of +10.7% and order growth of 11%.

Non-Food retailers – a mixed bag

Less newsflow on the non-food side to date, but telling contrasts in performance between those retailers that span both food and non-food (M&S and Sainsbury’s).

In contrast to the stellar performance in food, Marks & Spencer’s non-food sales were disappointing. Fashion, Home and Beauty sales totaled £1,273m in the 13 weeks to 27 December, down -2.5% overall and -2.9% like-for-like. Of course, the business attributed the performance to the continued after-effects of the cyber attack in April. Whilst a plausible explanation to some degree, these non-food figures nevertheless feel weaker than expected.

Certainly when compared to Next, which again produced a stellar set of figures and even increased its full-year profit guidance. During the nine weeks to 27 December, the business posted an increase in full-price sales of +10.6% against the same period last year, with UK sales up +5.9% and international up +38.3%. This added an additional £51m to the group’s revenues for the year, prompting a £15m upgrade to pre-tax profit guidance to £1.15bn, which would represent a +13.7% increase on the previous year. But, ever the conservative, it expects growth to decelerate next year and is forecasting growth of +4.5% in full price sales.

In contrast, Primark’s owner ABF issued a post-Christmas profit warning. However, this primarily reflected weak performance in Continental Europe and the US, rather a shortfall in the UK. Total UK sales grew by +3% in the 16 weeks to 3 January 2026, with like-for-likes ahead by +1.7%. Not as good as Next, but better than M&S. But internationally, the picture was bleak. Continental Europe (where Primark generates 49% of group sales) saw total sales down -1% and like-for-likes down -5.7%. Sales in the US were up +12%, but this was largely down to new space and a like-for-like figure was not provided. The general read from this is that however challenged we think the UK retail market to be, it's probably much worse elsewhere on the globe.

Equally contrasting was the performance between food and non-food at Sainsbury’s. General merchandise and clothing were down -1.1% in the 16 weeks to 3 January 2026 and down -1.0% in the 6 weeks to 3 January. Sales at Argos fell by -1.0% In Q3 and -2.2% over Christmas. This was, despite volume growth. For that, read deflation. For that, blame Black Friday. Need I say more?

Still to come…

 Most of the major operators have been quick to report, but trading statements from other retailers will continue to trickle in over the next couple of weeks. And we’ll see if the old retail adage of ‘bad numbers take longer to count’ still rings true.

We should get the first meaningful read on retail sales next Tuesday (13 January) from the BRC. Unlike the ONS, the BRC do not make the rookie error of reporting on a month-on-month basis, but their narrative is unlikely to be positive, however good the actual figures prove to be. The December figures in isolation are likely to be depressed by a demanding comp (Dec 2024 total +3.2%, like-for-like +3.1%), possibly to below +1%. For Q4 as a whole, I’d expect something around +1.5% total and +1.0% like-for-like. But I have greater conviction in the narrative being unduly gloomy on account of the BRC’s agenda to never talk the market up.  

The definitive outcome on Christmas trading, in theory, comes with the ONS retail sales figures for December / Q4 / FY 2025, which aren’t due to be released until Friday 23 January. By which time everyone has actually made up their own mind and few will still care. And, of course, the real and most meaningful numbers will be obscured by mindless month-on-month comparisons (as opposed to year-on-year ones) and no end of ham-fisted “seasonal” and “calendar” adjustment to play down the seasonal spike that is an undeniable reality of Christmas.

Watch this space…