It was a “disappointing” January for discretionary UK retail according to advisory firm BDO’s latest High Street Sales Tracker (HSST).
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It said in-store discretionary sales grew by 3.2%, compared to a negative base last year when total like-for-like retail sales had fallen by 0.8% and in-store sales suffered an even more significant fall with 4.2% drop. That means the latest January figures didn’t didn’t recover the losses of this time last year.
The best news in January 2025 came for online sales as they saw “significant growth”, although this was driven in part more by poor January weather than by any ultra-enthusiasm on the part of consumers.
The worst news overall was that “fashion and homewares bricks and mortar sales performed particularly poorly against negative bases”.
So, let’s look at the details. Total retail sales in discretionary spend categories grew by 7.1% in January, but “concerns remain that 2025 is set to be another difficult year for retail as rising costs continue to mount”, BDO’s HSST said.
As mentioned, online outperformed, rising 15.5% year on year while that not-good-enough 3.2% in-store increase after last January’s larger fall came as BDO said there has been “a large drop in volumes over the past two years”.
Despite plenty of big-name fashion and homewares retailers reporting a good festive season and ongoing strength in the New Year, their categories were weak overall last month.
Yes, the HSST showed their sales in-store rose 3.3% and 3.4%, respectively. But in the previous January they’d been down 6.7% and 10.1%, so it was another story of the latest increase looking good on the surface but failing by a wide margin to recover the deficit of the previous year.
BDO said January’s poor weather may have contributed to mixed footfall on the high street and driven a better result for online sales, but that the numbers were “also a continuation of the sector’s overall poor performance in 2024 and a disappointing final Golden Quarter”.
Sophie Michael, Head of Retail and Wholesale at BDO, commented: “These results may seem positive on the surface, but the underlying numbers show that the weak growth in the run up to Christmas has continued into the New Year. While many retailers may have seen a rise in sales through the release of some of the pent-up consumer spending that didn’t come through before Christmas, January trading for discretionary spend requires heavy encouragement through discounting; this delayed spending will no doubt have a significant impact on already thin margins.
“The sector has been challenged for some time by the impact of significant cost increases, which will continue to mount throughout the year, particularly post the implementation of the changes in the budget this April. Raising the thresholds for National Insurance contributions will disproportionately affect retailers, who tend to have large workforces with lower average earnings. Add in increases to the National Living Wage, business rates and the Plastic Packaging Tax all coming together and at fast pace, their thin margins will be under even more pressure.
“Retailers need to find a way to balance the increased cost of doing business while investing in product development, customer service and underlying technology, like AI, that will maintain their competitiveness. They need clear visibility on how their costs will increase to identify effective actions to mitigate the impact. This includes clarity over how their supply chain costs will rise, with many of the businesses they rely on being subject to some of the same pressures as themselves. The sector already saw a high number of job losses in 2024 and retail store closures; with the oncoming cost increases, these numbers are unlikely to ease in 2025.”
H&M Group is continuing the slow and steady rollout of its Arket brand with plans to open physically in Greece for the first time this year.
Arket
The Greece debut will be in the country’s capital city, Athens, although we don’t yet know the exact location nor the month in which it will open its doors.
Arket’s MD Pernilla Wohlfahrt said Athens “with its unique blend of ancient heritage and vibrant contemporary culture, provides the perfect backdrop for our modern design destination”.
Slow and steady really underlines the Swedish retail giant’s approach with Arket (as it does with the group’s Cos brand too). The first Arket store opened in London as far back as 2017 and as of this month, there are still only 39 physical stores for it across 17 countries in Europe, China, and South Korea. It also sells online in 31 markets.
That said, the pace of openings has accelerated slightly in the past year or so. Last November, the company announced it would debut in Austria with a physical store in Vienna this year and in Norway with a store in Oslo.
Earlier in the year it debuted in Poland, in Warsaw, and it also entered Spain and Italy last summer with stores in Barcelona and Milan.
Budget retailer Pepco group has announced some major boardroom changes in order “to support accelerated transformation and focus on value creation”.
The owner of Pepco, Poundland and Dealz said non-executive chair Andy Bond has decided to step down from the role on the completion of the AGM in March after some 13 years with the group, but he’ll continue as a non-executive director.
The announcement preceded news that Poundland’s managing director in the UK, Austin Cooke, has left the discount chain shortly after ex-MD Barry Williams returned to take a seat on its board.
That news hasn’t been formally confirmed but was first reported by Retail gazette.
Cooke had become MD in autumn 2023 having moved from Pepco’s European operations. Williams is overseeing a comprehensive assessment on both Poundland and the Irish Dealz chain.
In its official announcement of its boardroom changes, Pepco added that Bond’s decision to step down comes “at a time when the core Pepco business has returned to good financial health”, although there’s no denying that the UK-based Poundland business continues to face major challenges as its latest management change highlights.
It said the board “would like to express their appreciation to Andy for his service as chair” and that he’ll be succeeded by Frederick Arnold, currently an independent non-executive director who joined the board in June 2024.
Arnold is a financial specialist with lots of experience in the UK and US and has served on the boards of a number of non-retail businesses. He began his career in banking.
Also, as part of the updated relationship agreement with the company, its majority shareholder, IBEX Topco Ltd “will have the right to recommend for nomination the chairs of the board and the remuneration committee as long as IBEX holds over 30% of the voting rights in the company’s stock”.
Pepco will in future have a smaller board with the resignation of non-executive director Maria Fernanda Mejia and executive director and CFO Neil Galloway, resulting in a board comprised of one executive director and seven non-executive directors.
It also announced the appointment of Willem Eelman as CFO. He’s “a highly experienced European CFO including 11 years with GrandVision and previous roles at C&A Europe and Unilever”.
Most of the changes will become effective as of the AGM on 12 March but Eelman joins this week, although he officially becomes CFO from the end of the upcoming AGM.
The company also said it intends to implement some “complementary governance changes to increase both the focus on and pace of value creation. These changes include creating enhanced alignment between stakeholder best interests and longer-term value creation via the introduction of multi-year equity grants as part of overall remuneration for senior leadership and non-executive directors”.
And CEO Stephan Borchert, along with Eelman and the management team will host a Capital Markets Day on 6 March, during which they’ll update on their strategic plans including “building on the momentum with the Pepco and Dealz businesses and a comprehensive assessment of Poundland and how to improve its trading performance”.
President Donald Trump said on Sunday the sweeping tariffs that he has imposed on Mexico, Canada and China may cause “some pain” for Americans, as Wall Street and the largest U.S. trading partners signaled hope that the trade war would not last long.
Reuters
Trump, who began his second term as president on Jan. 20, defended the tariffs that he announced on Saturday. Canada and Mexico said they were working together to face the 25% U.S. duties on imports, which promise to jolt the integrated economies of three North American countries that have had free-trade agreements for decades.
Canada and Mexico immediately vowed retaliatory measures after Trump’s announcement on Saturday. China said it would challenge Trump’s 10% tariffs at the World Trade Organization and take unspecified countermeasures.
Critics said that the moves against the three largest U.S. trading partners will hurt Americans by driving prices higher and slowing global growth.
Trump defended his decision on social media on Sunday.
“The USA has major deficits with Canada, Mexico, and China (and almost all countries!), owes 36 Trillion Dollars, and we’re not going to be the ‘Stupid Country’ any longer,” the Republican president wrote.
Writing in capital letters, Trump added, “This will be the golden age of America! Will there be some pain? Yes, maybe (and maybe not!).”
Trump did not specify what he meant by “some pain.”
A model gauging the economic impact of Trump’s tariff plan from EY Chief Economist Greg Daco suggests it would reduce U.S. economic growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in “stagflation” – high inflation, stagnant economic growth and elevated unemployment – at home.
Financial markets were closed over the weekend but the measures will initially be felt when U.S. stock futures trading 6 p.m. ET (2300 GMT) on Sunday. Markets were awaiting developments with anxiety, but some analysts said there had been some hope for negotiations, especially with Canada and China.
“With only two days before implementation, the tariffs look likely to take effect, though a last-minute compromise cannot be completely ruled out,” Goldman Sachs economists said in a note Sunday.
They added that since the White House set very general conditions for their removal, the levies are likely to be temporary, “but the outlook is unclear.”
The Trump tariffs, outlined in three executive orders, are due to take effect on at 12:01 a.m. ET (0501 GMT) on Tuesday. Trump vowed to keep them in place until what he described as a national emergency over fentanyl, a deadly opioid, and illegal immigration to the United States ends.
China left the door open for talks with the United States. Its sharpest pushback was over fentanyl.
“Fentanyl is America’s problem,” China’s foreign ministry said, adding that China has taken extensive measures to combat the problem.
Canada’s ambassador to the United States, Kirsten Hillman, on Sunday signaled hope for an agreement.
“We’re hopeful that they don’t come into effect on Tuesday,” Hillman said on ABC’s “This Week” program.
Hillman said Canadian officials are ready to keep talking to the United States but that Canadians expect that their government “stands up for itself.”
Trump has sounded particularly dismissive toward Canada, with calls for the country to become the 51st U.S. state and saying it “ceases to exist as a viable country” without its “massive subsidy.”
A Reuters/Ipsos poll released last week showed Americans were divided on tariffs, with 54% opposing new duties on imported goods and 43% in support, with Democrats more opposed and Republicans more supportive.
The tariff announcement made good on Trump’s repeated threat during the 2024 presidential campaign and since taking office, defying warnings from top economists that a new trade war with the top American trade partners would erode U.S. and global growth, while raising prices for consumers and companies.
Less than two weeks into his second term, Trump is upending the norms of how the United States is governed and interacts with its neighbors and wider world.
Trump declared the national emergency under laws called the International Emergency Economic Powers Act and the National Emergencies Act to back the tariffs. They give the president sweeping powers to impose sanctions to address crises.
Trade lawyers said Trump was once again testing the limits of U.S. laws, and the tariffs could face legal challenges. Democratic lawmakers Suzan DelBene and Don Beyer decried what they called a blatant abuse of executive power.
Republicans welcomed Trump’s action. Industry groups and Democrats issued warnings about the impact on prices. “Who will suffer most? American consumers – who will face skyrocketing prices on everything from groceries to gas to cars,” U.S. Representative Josh Gottheimer wrote on social media.
Investors were considering the effects of additional tariffs promised by Trump, including those related to oil and gas, as well as steel, aluminum, semiconductor chips and pharmaceuticals. Trump has also vowed actions against the European Union. “It’s only a matter of time before the EU is targeted,” said Marchel Alexandrovich of Saltmarch Economics in London.
The European Union said it was not aware of any additional tariffs being imposed on EU products. A European Commission spokesperson said the EU believes tariffs are harmful to all sides but “would respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU goods.”
Europe’s biggest carmaker, Volkswagen, said it was counting on talks to avoid trade conflict.
Automakers would be particularly hard hit, with new steep tariffs on vehicles built in Canada and Mexico burdening a vast regional supply chain where parts can cross borders several times before final assembly.
In a message aimed at Americans, Canadian Prime Minister Justin Trudeau said U.S. citizens would be hurt by rising grocery and gasoline prices, as well as the possible shuttering of auto assembly plants and limited supplies of metals and minerals. Trudeau urged Canadians to boycott the United States and its goods.
Trudeau said on Saturday evening that Canada would respond with 25% tariffs against $155 billion of U.S. goods, including beer, wine, lumber and appliances, beginning with $30 billion taking effect on Tuesday and $125 billion 21 days later.
Mexican President Claudia Sheinbaum did not provide details on planned retaliatory tariffs.
A White House fact sheet said the tariffs would stay in place “until the crisis alleviated,” but gave no details on what the three countries would need to do to win a reprieve.
Trump imposed only a 10% duty on energy products from Canada after concerns raised by oil refiners and Midwestern states. At nearly $100 billion in 2023, imports of crude oil accounted for roughly a quarter of all U.S. imports from Canada, according to U.S. Census Bureau data.
The White House officials said that Canada specifically would no longer be allowed the “de minimis” U.S. duty exemption for shipments under $800. The officials said Canada, along with Mexico, has become a conduit for shipments of fentanyl and its precursor chemicals into the U.S. via small packages that are not often inspected by customs agents.
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