FTSE 350: Mixed fortunes for clothing chains

That said, let’s get one thing clear: the data is not on clothing retailers’ side. Overall, as per the BRC-KPMG Retail Sales Monitor (RSM) for December, three-month non-food sales fell by 0.4 per cent in total and 1.2 per cent on a same-store basis. In-store non-food sales fell by 2.8 per cent, with like-for-like sales down by 3.9 per cent. This was followed by several UK retailers referencing material uncertainty in their early January trading statements.

Such concern might have prompted Next’s (NXT) management to revise down full-year profit expectations by 0.6 per cent, but the overall picture is far better than feared. Higher sales of lower-margin, seasonal products and increased costs associated with online growth largely explain the downgrade, but full-price sales over Christmas rose 1.5 per cent, with good growth also reported in the three-week lead-up to the big day. Meanwhile, year-to-date online sales have risen 15 per cent, comfortably offsetting a corresponding 7 per cent squeeze across physical stores – a performance analysts at Liberum called “excellent”.

Ted Baker (TED) provided an equally chirpy update, revealing a 12.2 per cent increase in retail sales during the five-week period from 2 December to 5 January. That was despite a high-profile publicity crisis for the brand, which saw the group’s founder and chief executive, Ray Kelvin, take a leave of absence after he was accused of workplace harassment. Echoing trading patterns at Next – and multiple other retailers – e-commerce sales increased by 18.7 per cent and represented 25.7 per cent of total retail sales.

Succeeding in clothing retail comes down to three essential guiding principles: digital first, quality products and appropriate price. This can be applied to businesses up and down the value chain, be it luxury design house Burberry (BRBY) or Mike Ashley’s Sports Direct (SPD).

For investors, avoiding a middle-market bereft of real differentiation is crucial. That lack of a standout product line particularly affected Superdry (SDRY) in 2018, and could prove a consistent challenge in 2019, although the departure of chief product officer Brigitte Danielmeyer after a period of compassionate leave, could herald a change in the product line. The news came shortly after one of the group’s original founders, Julian Dunkerton, mounted a highly publicised campaign to re-join the board to help turn the business around.