MKS

U.K. Malls Lure Holiday Shoppers, Dispelling Concerns (Update3)
Dec. 22 (Bloomberg) -- U.K. retailers are attracting more customers and avoiding widespread price cuts before the December holiday, dispelling concern about a decline in sales at the busiest time of the year, managers of some of the busiest malls said.

Store operators including Marks & Spencer Group Plc, the largest U.K. clothing retailer, are extending opening hours and have cut inventory to avoid reducing prices prematurely, according to managers including Tom Nathan at the Brent Cross center, north of London. With Christmas falling on a Sunday, stores will have an extra day's holiday trading compared with last year.

``Most of the retailers in our center are reasonably optimistic,'' said Keith Campbell, general manager of the Victoria Centre in Nottingham, central England. ``Nobody's seeing the headlines of Armageddon that were appearing several months ago.''

Retailers are relying on this month's holiday to make up for a year when earnings have been hurt by a decline in household spending. According to British Retail Consortium data, revenue at U.K. stores increased in November for the first time in eight months. Shoppers spend about 10 billion pounds ($18 billion) more in December than any other month, the BRC said.

`No Blockbuster'

After underperforming benchmark indexes for much of 2005, U.K. retail stocks have rallied since the beginning of November as concern about holiday sales has dissipated. The FTSE 350 General Retailers Index has risen 13 percent in that time compared with a 4.6 percent gain in the FTSE 100 Index. For the year, the retail index's 2.2 percent advance lags behind FTSE 100's 16 percent advance.

``Christmas won't be a blockbuster,'' said Paul Mumford, who manages funds worth the equivalent of $657 million at Cavendish Asset Management in London, including retailers such as Marks & Spencer. ``Retailers are concentrating on getting as much sold at full price and have managed their stock better.''

At the Trafford Centre near Manchester, northwest England, the number of shoppers in December is up 4 percent on last year, operations director Gordon McKinnon said in a statement. Last week was the busiest in the center's seven-year history as 750,000 people came through the doors, he said. The 150,000 shoppers who visited the U.K.'s third-largest mall on Dec. 19 was also a record.

MetroCentre

Shopper numbers are up at Britain's two largest retail centers, MetroCentre in Gateshead, northeast England, and Bluewater in the Southeast.

More than 100,000 people a day have used MetroCentre for the last two weeks, up from the previous year's figure, which was ``in the 90,000s,'' public relations manager Jane Holmes said.

As many as 6 million shoppers will use Bluewater over the holiday and will spend more than 200 million pounds, general manager Matt Clements said in a statement. Sales and customer traffic in November were up 1 percent on last year, he said.

``All our retailers tell us they are reporting strong sales this Christmas and we're getting busier and busier as the week goes on,'' said Lydia Young, marketing manager at Braehead Shopping Centre, near the Scottish city of Glasgow.

The Confederation of British Industry provided further evidence yesterday that consumer spending is recovering. An index of U.K. retail sales rose to a 10-month high in December, according to a survey by the country's biggest employers' group.

Discounting on Books

John Lewis Partnership, the U.K.'s largest department-store company, said today it had record sales of 85.1 million pounds for the week ended Dec. 17, an 8 percent gain on the previous year. Sales this week are up 8.9 percent, the closely-held company said in a statement. Most retailers report Christmas sales in January.

Price cutting before the holiday is less widespread this year, according to mall managers. Discounting has been most prevalent among book chains such as HMV Group Plc's Waterstones amid rising competition from supermarkets and online retailers.

At Brent Cross, six of 120 stores have begun clearance sales, Nathan said. Most of these are footwear stores, which normally cut prices before the holiday,

``My sense is there is probably marginally less discounting than we had this time last year,'' Nathan said.

At Trafford Centre, eight of 230 outlets have started clearance offers, fewer than a year earlier, spokeswoman Hannah Foster said. As few as 20 of MetroCentre's 326 stores are holding sales, most of which are shoe shops, Holmes said.

Retailers such as Marks & Spencer have less need to cut prices after reducing their inventory. Marks & Spencer has 40 percent less stock to clear compared with last year and is starting its post-holiday clearance later. The London-based company isn't opening any of its 390 U.K. stores on Dec. 26.

Marks & Spencer's shares climbed 4.25 pence, or 0.9 percent, to 493.25 pence in London, bringing this year's gain to 44 percent.

Late-Night Shopping

To attract more customers, stores and shopping malls are staying open later this year than they have ever done before.

``We're open until 10 p.m. over Christmas, but we're considering opening until midnight next year as sales have been very strong,'' Braehead's Young said.

Marks & Spencer is opening 11 of its outlets for 24 hours a day this week, while another 19 are trading until midnight. A further 105 stores are open until either 10 p.m. or 11 p.m.

Tesco Plc, the U.K.'s largest retailer, has noticed a shift in shopping patterns as more people buy groceries during the night to avoid crowding, spokeswoman Vicki Martin said. About 300 of Tesco's 1,780 stores are staying open 24 hours a day this week. Tesco's shares dropped 1.75 pence, or 0.5 percent, to 329.5 pence. The stock has risen 2.4 percent this year.

At Brent Cross, Nathan expects a busy week because shoppers have an additional day before the holiday to buy their gifts.

``The closer you get to Christmas, the more critical it becomes because in effect you've got six days trading instead of five,'' he said.