Marks & Spencer has reported better-than-expected sales figures for the Christmas trading period, driven by market-leading growth in its food division.
Over the 13 weeks to 30 December, the group’s UK sales rose 8.1% on a like-for-like basis to £3.57bn.
In its food unit, like-for-like sales climbed 9.9%, ahead of the most optimistic analyst forecast. M&S stated that it was the top-performing grocer over the festive period, with volume growth of around 7% as moves to improve its price competitiveness and product range paid off.
Supply chain investment was said to have helped to drive better availability, whilst categories such as meat, produce, grocery and in-store bakery all delivered strong growth, supported by its programme of innovation and quality upgrades. Meanwhile, its ‘Remarksable’ value sales grew by around 18% as the chain continued to attract new customers.
The group’s clothing & home division also soundly beat expectations, with like-for-like growth of 4.8%. M&S stated that this was driven by growth in average selling price, partly as a result of reduced promotions year-on-year. It also made market share gains, led by the strong performance of its improved womenswear range.
The company said the strong performance had underpinned its confidence about profit growth this year. However, it also sounded a note of caution due to pressure from higher-than-anticipated wages and business rates inflation.
“We enter 2024 with a spring in our step, but clear-eyed on the near-term challenges,” said Chief Executive Stuart Machin.
He added: “We are determined to deliver our objective of driving 1% growth in market share in both businesses and to up the pace of our transformation: keeping a relentless focus on trusted value; accelerating our store rotation and renewal plans; doubling down on our supply chain programmes to improve availability and lower costs; and resetting our data, digital and technology strategy to unlock benefits in future years.
“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.”
Shares in M&S have doubled over the past year as its recovery plan gathered momentum and started to deliver strong results. However, its share price fell over 5% in early trading today after the group noted both consumer and geopolitical risks in the year ahead.
Richard Lim, CEO at Retail Economics, commented: “These are fantastic results delivered in a challenging market. Shoppers have fallen back in love with M&S, buying into the re-energised proposition that’s centred around a leading omnichannel service. It’s been a mightily impressive turnaround and there’s lots of momentum in the business heading into 2024.
“While the outlook remains challenging, they are well-positioned to navigate through these choppy waters.”
NAM Implications:
- A successful turnaround, especially in food.
- (albeit less comfort for brands…)
- A detailed spec for suppliers:
- a relentless focus on trusted value
- accelerating our store rotation and renewal plans
- doubling down on our supply chain programmes
- to improve availability and lower costs
- and resetting our data, digital
- NB. Doubling of share price should make M&S a good risk-prospect for all stakeholders.
