By Paul Sandle
LONDON (Reuters) – British retailer Marks & Spencer reported strong Christmas sales, with demand for turkeys and sparkling wine delivering its highest ever share of the food market and sequin-decorated partywear boosting its clothing sales.
Chief Executive Stuart Machin said M&S outperformed the market in food in both volume and value for the second year running, whilst it had the highest share in clothing and home in seven years.
“After two years of COVID disruption customers enjoyed entertaining at home,” he told reporters on Thursday.
The retailer’s high-end food offer traditionally appeals to shoppers at Christmas, and 2022 was no exception despite increasing economic pressure on consumers.
It benefited from improved availability of seasonal lines including turkeys, where it said it retained its leading market share for the third year running.
But its “Remarksable Value” offer also performed strongly. As a whole, it reported a better-than-expected increase in like-for-like food sales of 6.3%.
“Even in clothing, we saw people trading to value, but we also saw them trading to some of the premium products as well,” he said. Clothing and home sales rose 8.6%.
The 139-year-old retailer’s strong performance adds to evidence that shoppers were determined to spend at Christmas despite inflation running at 10.7% and consumer confidence close to record lows.
Tesco, Britain’s biggest supermarket, also reported stronger than expected Christmas sales on Thursday, with like-for-like sales up 7.2% in the six weeks to Jan. 7.
Inflation in food – which is running higher than the headline figure – is boosting the value of sales at supermarkets, even as customers buy fewer items.
Machin, however, said M&S was passing on less of the inflationary pressure to customers than its competitors and it managed to grow its food volume by 1.1% in December.
But M&S remained cautious about the wider economic environment, saying there were “clear macro-economic headwinds ahead and underlying cost pressures”, but it was confident its full-year results would meet its guidance.
Machin said the outlook for consumers was uncertain. “We think our customers are slightly more insulated up against these headwinds, but it’s pretty difficult to call,” he said.
M&S is forecasting a fall in profit in its 2022-23 year, having warned in November of a “gathering storm” of higher costs and pressure on household budgets.
Its shares, which had a strong run into the update, with a 46% rise over the last three months, fell 1.1%.
Analysts at UBS said that while trading was “robust”, investors were looking for an upgrade that hadn’t materialised.
(Reporting by Paul Sandle; Editing by Kate Holton, Kirsten Donovan)
