Bloomberg News

London Luxury Shops See Lean Christmas as Bankers Curb Spending

December 28, 2011

Dec. 16 (Bloomberg) -- London’s luxury retailers are braced for weak sales over the key Christmas and New Year business period amid signs bankers and brokers are curbing their spending on concern the economy will slide back into recession next year.

The number of visitors to the Gucci store in London’s Royal Exchange shopping mall opposite the Bank of England is similar to last year, said store manager Tara Thompson. Sales at jeweler Tiffany & Co. in Canary Wharf will “probably” match last year, said store manager Luke Richardson. At the Bulgari outlet in the Royal Exchange, Rosetta Citton, who runs the store, said she expects holiday sales at similar levels to last year.

“All the uncertainty in the economy does affect our customers’ spending habits, but we’ve got to hope for the best,” Thompson said in a telephone interview.

London’s bankers may receive 4.2 billion pounds ($6.5 billion) in bonuses for 2011, the lowest in almost a decade, as financial-services firms’ earnings dwindle, the Centre for Economics & Business Research Ltd. said in October. Chancellor of the Exchequer George Osborne has urged banks to strengthen their financial defenses rather than pay big bonuses this year as the Treasury said it will explore ways to tackle “unacceptable” levels of pay.

Chris Marino, 53, an interdealer broker for BGC Partners Inc. in New York, has agreed to not exchange gifts with his wife this Christmas.


“Traditionally my wife used to pick out a piece of jewelry and I’d buy it for her,” Marino said in an interview at the Royal Exchange. “This climate will carry on for at least the first two, maybe three quarters of next year. The jobless numbers are frightening.”

Financial firms globally have announced more than 200,000 job losses this year, up from about 58,000 last year and 174,000 in 2009, according to data compiled by Bloomberg. Royal Bank of Scotland Group Plc, which has eliminated about 27,000 jobs since receiving the biggest banking bailout in the world, said in October it will stop subsidizing holiday parties and banned staff entertainment for the rest of the year.

Shopper numbers in the week starting Dec. 5 fell in all locations compared with the same week last year, the British Retail Consortium said yesterday in an e-mailed statement. On main streets, the decline was 2.6 percent, according to the BRC.

U.K. retail sales fell more than economists forecast in November. Sales including fuel declined 0.4 percent from October, the Office for National Statistics said yesterday in London. The median forecast of 23 economists in a Bloomberg survey was for a 0.3 percent drop.


“I’m being more aware,” about Christmas spending, said Alistair Mackie, 26, an analyst at Citigroup Inc. “I’m making sure I’m not paying too much for travel and on gifts.”

Earlier this month, Citigroup, the third-biggest U.S. bank by assets, announced it will cut about 4,500 jobs in coming quarters to reduce costs amid slumping revenue and “unprecedented” market conditions. Morgan Stanley said yesterday it plans to cut about 1,600 jobs globally.

December retail sales in the U.K. are expected to be no better than last year’s 36.2 billion pounds, according to Deloitte LLP. That would be the first holiday with no growth since 2008, when the financial crisis that followed the collapse of Lehman Brothers Holdings Inc. caused consumers to cut back.

Retailers such as Debenhams Plc, the U.K.’s second-largest department-store chain, started discounting early as they seek to entice shoppers. Debenhams said it would reduce prices by as much as 40 percent compared with 25 percent last year.

Late Shoppers

“It’s fiercely competitive,” Natalie Berg, an analyst at Planet Retail Ltd., said in a telephone interview. “We’ve seen a lot of retailers discount early in a bid to get shoppers through the doors. With all this heavy discounting we’ll see margin erosion and a limited appeal of Boxing Day and January sales as shoppers don’t need to wait for promotions.”

Antique jeweler Kojis in the Royal Exchange is seeing more browsers than impulse buyers, said store manager Semih Yilmaz.

“People will delay in buying and some will skip buying expensive gifts,” Yilmaz said by phone. “We’re the last people to get a bite of the cake at Christmas as people browse before they buy.”

Some workers in London’s finance industry remain unaffected. “My job is the same and prospects are positive going ahead,” Mike Camburn, a 43-year-old partner at accountancy firm KPMG, said in an interview in Canary Wharf. “There’ll be no ostensible belt tightening.”


The Organization for Economic Cooperation and Development forecast on Nov. 28 that the U.K. economy will shrink in the current quarter and first quarter of 2012, pushing the country back into a technical recession. The Paris-based OECD forecast 0.5 percent growth in 2012.

Mike Thompson, group retail director for clothing retailer Jaeger Group Ltd., which has two shops in Canary Wharf’s mall, said the company “does not comment on trading” because it is privately owned. Fiona Rushton, a spokeswoman for Hermes International SCA, the French maker of Birkin bags and silk scarves, also wouldn’t comment.

A spokeswoman, who declined to be named, for LVMH Moet Hennessy Louis Vuitton SA, the world’s largest maker of luxury goods, wouldn’t comment. Hermes and LVMH both have stores at the Royal Exchange. Cecile Simon, a spokeswoman for Montblanc U.K. Ltd., the luxury pen-maker, also declined to comment.

“We’re slightly tightening the belt,” said Roddy Spencer, an insurance broker who didn’t name his employer. “I’ll definitely be cutting back on the amount of presents I’ll be buying. No-one knows what’s going to happen in 2012.”

--Editors: Tim Farrand, Paul Jarvis

To contact the reporter on this story: Katie Linsell in London at

To contact the editor responsible for this story: Colin Keatinge at

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