A make or break Christmas for retailers
JJB Sports and Topps Tiles head this year's list of Christmas retail losers, according to analysis by financial website The Motley Fool - Fool.co.uk.
Additionally, saddled with excessive debt, hampered by declining sales and burdened with low valuations, it could be a make or break Christmas for some of Britain's other familiar household names.
On their own, falling sales, low market value and mounting debt are not a problem. But together they can form a lethal cocktail that can quickly turn a retail high-flyer into a back street has-been. The Motley Fool's analysis uncovers ten retail winners and losers listed on the London stock market.
Sales at JJB Sports are forecast to shrink 42% next year. Coupled with net debt of £30 million and a market value of £200m, JJB tops our list of exposed retailers. Motors dealer Pendragon looks vulnerable too. Its net debt is twice the size of the value of the business and car sales are expected to fall by a quarter.
Sales at Findel, which owns household goods distributor Kleeneze, are only expected to fall modestly. But net debt of £171m is more than twice the size of the business. Debts at Britain's biggest tile and wood flooring specialist Topps Tiles also look onerous. What's more sales are dropping too.
Fastest Growers - The world at their feet
Despite challenging times for many online retailers, Asos holds the top spot for the fastest-growing retailer this year. With sales predicted to grow 61%, £13 million of net cash and a market value of almost £300 million, Asos appears immune to the fashion industry's woes. Cash-rich JD Sports Fashion and Laura Ashley are in enviable positions too.
Highly indebted Debenhams may be one of this year's Christmas surprise winners. Despite net debts of almost £600 million, which is more than half the value of the business, rising sales may be the salvation for the embattled department store owner.
David Kuo, Director at The Motley Fool comments: "For some retailers it will be a make or break Christmas because festive trading can account for over half of annual sales.
"Retailers with net cash or low levels of debt may be able to cope with a downturn in sales. But those that rely on loan financing may find otherwise.
"Retailing is not rocket science - it's a lot harder than that. Consequently, retailers that stick to a simple business model are some of the best placed to survive economic downturns. Those that take on excessive debts when times are good may pay the price in the lean years".