Marks & Spencer Group sales exceeded high expectations during the key Christmas period as groceries and women’s clothing saw a surge in demand.
The retailer’s like-for-like sales rose by 8.1 percent in the thirteen weeks to December 30, while food sales growth exceeded expectations by 9.9 percent, and food and home sales by 4.5 percent. 8 percent rose – well above expectations of 2.8 percent.
Boss Stuart Machin said M&S had led the market with volume growth of around 7 per cent in each month of the quarter, serving ‘more customers than ever before’, while womenswear had ‘the most notable, growing volume and growing volume and value was significantly higher than the market’. .
Actress Hannah Waddingham starred in M&S’s controversial Christmas advert
The 140-year-old group, which received criticism from some quarters for this year’s Christmas adacknowledged additional staff and business rates costs over the period, but told investors it would meet forecasts for the year.
M&S is forecast to make full-year profits of £705 million, up from £482 million the year before.
The group said: ‘As we enter the new year and FY25, expectations for economic growth remain uncertain, with consumer and geopolitical risks.
‘We are also facing additional cost increases due to higher than expected wage and business rates related cost inflation.
‘Nevertheless, the strong performance in Christmas trading provides confidence that results for the year will be in line with market expectations.’
Machin added: “We enter 2024 with a resilient move, but with a clear view of the near-term challenges.
“We are committed to achieving our target of 1 percent market share growth in both businesses and accelerating the pace of our transformation.
‘Our vision is to be the most trusted retailer, doing the right thing for our customers, with quality products at the heart of everything we do, and we are just scratching the surface of what we can achieve. Lots done, lots to do, lots of opportunities ahead.”
The High Street strong has been on a roll since CEO Machin and chairman Archie Norman led a recovery that has seen the share price more than double over the past year, helping M&S return to the FTSE 100 after a four-year absence.
Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, said: ‘The Clothing and Home division has been a problem child for M&S for years.
‘The new strategy, launched last year, aims to improve brand perception and designs, reduce discounts and improve online offerings, while reducing costs and creating a more entrepreneurial culture. The first signs are that this plan is resonating with consumers.
‘While the UK consumer environment remains uncertain, there are more positive signs than this time last year, with interest rate cuts likely to ease some pressure. Combine this with M&S’s self-help initiatives and execution continuing to impress, and it suggests the recent trading momentum can continue.”
Unpublished data from retail expert Kantar, seen by the Mail on Sunday, shows grocery sales at market leader M&S rose 14.2 percent in the crucial four weeks before Christmas Eve, compared to the same period the year before.
However, the worst performing company was M&S joint venture partner Ocado, where sales grew by just 0.5 percent.
Ocado’s sales were not included in the latest M&S update.
Archie Norman, the chairman of M&S, has said he is ‘not satisfied’ with the joint venture’s performance and that there is ‘work to be done’ to improve the loss-making partnership. The deal, which was completed in 2019 and was worth a whopping £750 million, replaced a previous partnership between Ocado and Waitrose. M&S has reportedly added almost 600 products to Ocado’s website before Christmas.
M&S is one of several major companies reporting Christmas trading figures this week, with Tesco also reporting on Thursday.
Sainsbury’s saw a 7.4 per cent increase in like-for-like sales during the festive quarter, with promotions boosting the supermarket’s profits, while B&M unveiled plans to pay a special dividend after a strong Christmas trade.
Last week, Next published strong festive figures, while JD Sports had to adjust its profit expectations due to an unexpected turn of events.
It comes at a time when traditional grocers are fighting to defend their market share against German discounters Aldi and Lidl, which have seen their UK market share grow from 4 and 3.1 percent to 9.3 and 7 percent respectively in just a decade. 7 percent.
But grocers’ purchasing costs are finally falling after two years of rampant inflation, squeezing margins and driving up grocery bills.
Grocery prices rose 6.7 percent year-on-year in December, the lowest level since April 2022, and fell from a peak of 17.1 percent in February.
Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow a commercial relationship to compromise our editorial independence.