Marks & Spencer Group sales beat lofty expectations over the key Christmas trading period as groceries and womenswear drove a surge in demand.
The retailer’s like-for-like sales soared 8.1 per cent in the 13 weeks to 30 December, as food sales growth smashed forecasts at 9.9 per cent, and clothing and home revenues jumped 4.8 per cent – well ahead of expectations of 2.8 per cent.
Boss Stuart Machin said M&S had led the food market with volume growth of around 7 per cent in each month of the quarter, serving ‘more customers than ever before’, while womenswear was the ‘standout, growing volume and value significantly ahead of the market’.
Festive ad: Actress Hannah Waddingham starred in the controversial M&S Christmas ad
The 140-year-old group, which faced criticism from some quarters over this year’s Christmas ad, acknowledged additional staffing and business rates costs over the period but told investors it would meet forecasts for the year.
Forecasts see M&S set to post full-year profits of £705million, versus £482million in the previous year.
The group said: ‘As we enter the new year and FY25, expectations for economic growth remain uncertain, with consumer and geopolitical risks.
‘We also face additional cost increases from higher than anticipated wage and business rates related cost inflation.
‘Nevertheless, the strong Christmas trading performance provides confidence that the results for the year will be consistent with market expectations.’
Machin added: ‘We enter 2024 with a spring in our step, but clear eyed on the near-term challenges.
‘We are determined to deliver our objective of driving 1 per cent growth in market share in both businesses and to up the pace of our transformation.
Sales: Marks & Spencer Group sales beat lofty expectations over the key Christmas trading period
‘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 at the beginning of what we can achieve. Lots done, lots to do, lots of opportunity ahead.’
The High Street stalwart has been on a roll since chief executive Machin and chairman Archie Norman led a recovery that has seen its share price more than double in the past year, which propelled M&S back into 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 many years.
‘The new strategy, launched last year, aims to improve brand perception and designs, reduce discounting and improve the online offering, while taking a knife to costs and instilling a more entrepreneurial culture. Early signs are this plan is resonating with consumers.
‘While the UK consumer backdrop remains uncertain, there are more positive signs than this time last year, with interest rate cuts likely to relieve some pressure. Combine this with M&S’ self-help initiatives and execution that continues to impress, it suggests recent trading momentum could be sustained.’
Unpublished data from retail experts Kantar seen by the Mail on Sunday showed that grocery sales at market-leader M&S leapt by 14.2 per cent in the crucial four weeks to Christmas Eve compared with the same period the previous year.
The worst performer, however, was M&S joint venture partner Ocado, where sales grew by a mere 0.5 per cent.
Ocado sales were not included in the most recent M&S update.
Archie Norman, the M&S chairman, has said he is ‘not happy’ with the joint venture’s performance and said there was ‘work to do’ to improve the loss-making partnership. The deal, struck in 2019 and worth as much as £750million, replaced a previous tie-up between Ocado and Waitrose. M&S reportedly added nearly 600 products to Ocado’s website before Christmas.
M&S is one of many high street firms reporting Christmas trading figures this week, with Tesco also reporting on Thursday.
Sainsbury’s enjoyed a 7.4 per cent rise in like-for-like sales during the festive quarter, with promotions boosting the supermarket’s bottom line, while B&M revealed plans to pay a special dividend after strong Christmas trade.
Last week Next published strong festive figures, while JD Sports was forced to trim its profit expectations in an unexpected turn.
It comes as traditional grocers fight to defend market share from German discounters Aldi and Lidl, which have grown their UK market share from 4 and 3.1 per cent, respectively, to 9.3 and 7.7 per cent respectively in just ten years.
But grocers’ input costs are finally easing after two years of rampant inflation squeezing margins and driving grocery bills higher.
Grocery prices were up 6.7 per cent year-on-year in December, the lowest level since April 2022 and down from a peak of 17.1 per cent in February.
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