January 04 2008
Good news, bad news, part two
Sales for Amazon beat all their previous records, while results for Next and DSG look bad
Amazon.com has finished its 13th Christmas season and the results are the best ever season, with its busiest day being December 10. On that day, Amazon customers ordered more than 5.4 million items, which is 62.5 items per second.
Amazon Worldwide 2007 (Including results for the US, UK, Germany, France, Japan and Canada) shipped more than 99 percent of orders in time to meet holiday deadlines worldwide and on the peak day this season, Amazon's worldwide fulfilment network shipped over 3.9 million units to over 200 countries.
Amazon.co.uk received orders for over 950,000 items on its busiest day in the run up to Christmas this year – at a rate of 11 orders per second – exceeding all previous sales records. At its busiest, Amazon.co.uk shipped over 700,000 units in one 24 hour period, which represents 375 tonnes of goods. That means that on average, a delivery truck was leaving an Amazon.co.uk distribution centre once every seven minutes.
Amazon.co.uk received the highest amount of orders this year on Monday 10th December, a whole week later than the previous year’s biggest day.
‘I think a later peak order day illustrates the increased confidence that consumers have in Amazon.co.uk,’ said Amazon.co.uk Managing Director Brian McBride. ‘Customers are now happy to order much closer to Christmas as they trust the fact that we will deliver on time. Indeed, we saw a huge take up of our premium ‘Express Delivery’ and ‘Evening Delivery‘ services once the last order dates for our regular delivery options had passed.’
Disappointing Next
Next was the first major retailer to update the market on Christmas trading, posted a small drop in retail sales during the crucial Christmas period and said it is not forecasting a return to growth this year.
Chief executive Simon Wolfson said that consumers are "continuing to face increasing demands on their finances".
He added: "Many will experience year on year increases in mortgage charges for much of the coming year as a result of favourable fixed rate mortgage terms expiring."
Next reported that overall sales in the Christmas trading period were up 0.3% compared with last year. Next Directory, its home shopping catalogue, chalked up a 2.2% jump in sales, but the company's performance was undermined by a 0.3% drop in overall sales at its high street Retail arm.
Despite a like-for-like Retail reduction of 3.2% in sales the firm is still comfortably in profit and expects profits for the full year to January 26 2008 will be slightly ahead of expectations, at between £492m and £502m (up by 4% to 6%).
Unfortunately we’ll have to wait for their web results to be pulled out later in the year, however if overall trading is only up 0.3% and high-street store sales down 0.3% it’s not going to be a huge increase, which is extremely disappointing.
DSG do well(ish)
DSG the company behind the Dixons, Currys and PC World chains said like-for-like sales fell 1% in the 11 weeks to December 29, hit by an 11% drop in sales of computing goods. However its online businesses were doing extremely well, with total sales at Dixons.co.uk and FotoVista up 31%.
DSG expects full-year profits before tax to miss current expectations by some £40m to £50m.
The company said trading over the Christmas period, during which it normally generates more than half its annual profits, had been disappointing across the UK, Italy and Spain. Its operations in the Nordic countries, Greece and Central Europe delivered a "satisfactory" performance.
"Sales in UK computing were very disappointing with lower demand for laptops in the pre-Christmas gifting period, but good demand for games consoles and digital photo frames," the company said.
We thought we’d put our heads together at IR to solve their problems and we’ve come up with two solutions; get new adverts and use them sparingly and ditch the shops. The PC World, Currys ad campaigns have been exactly the same for the last three years, so why bother at all? If they hadn’t bothered spending quite so much money on the blanket advertising for PC World in the newspapers and on TV over Christmas, and instead spent some money on something new that didn’t feature on every page and in every ad break then they would have probably been on target. New adverts might actually wake people up a little. Finally take a leaf out of Argos book and ditch the shops, just have a shop front, a warehouse at the back and a bunch of stock pickers and keep the tech guys on the phone or doing home visits.
