New lockdown to 'weigh heavily' on Marks & Spencer after robust Christmas sales: reaction
Marks & Spencer has revealed “robust” festive trading as solid food sales helped offset a sharp slump at its clothing division.
Bosses at the high street stalwart said sales in the three months to December 26 fell 7.6 per cent on a like-for-like basis, with the food division growing 2.6 per cent, while clothing and home sales fell 24.1 per cent.
Coronavirus restrictions in the past three months saw the chain take a knock in sales as it suffered from the English November lockdown and tiering restrictions elsewhere across the UK.
Online sales were strong – including a new tie-up with Ocado to offer grocery deliveries for the first time and shoppers were keen on buying sleepwear and leisurewear as they stayed indoors.
Chief executive Steve Rowe also warned that, despite the UK signing a free trade agreement with the EU, new rules and regulations are set to “significantly impact” its overseas ventures in Ireland, the Czech Republic and France, although he insisted the company is “actively working to mitigate” the issues.
He said that, in spite of the Brexit and pandemic woes, M&S had a “robust” festive period.
“More importantly, beneath the Covid clouds, we saw a very strong performance from the food business, including Ocado retail, and a further acceleration of clothing and home online,” he said.
Rowe added: “Near term, trading remains very challenging, but we are continuing to accelerate change under our Never The Same Again programme to ensure the business emerges from the pandemic in very different shape.”
Arlene Ewing, investment manager at Brewin Dolphin, said: “The introduction of another lockdown will weigh heavily on Marks & Spencer – the slump in clothing and home sales in the period leading up to Christmas demonstrates the effect restrictions are having on the retailer.
“Strategic action has been required for some time at this side of Marks & Spencer and, while a greater shift to online is positive, it won’t be a panacea in itself.
“Food – specifically Ocado Retail – remains the bright spot and main driver of growth. Nevertheless, investors will likely be keeping a close eye on news around the business’s significant lease obligations and progress on its transition programme in May’s update.”
Richard Hunter, head of markets at Interactive Investor, noted: “The song remains the same at M&S, with a strong food offering unable to offset a clothing and home unit in need of urgent repair.”
On the food division, M&S saw mixed results, with food-on-the-go sales dropping in towns and city centres as office workers stayed at home.
But there were strong sales in the four weeks leading up to Christmas – up 8.7 per cent – particularly at large retail park and Simply Food stores, which have remained open throughout as “essential” retailers.
M&S added that the clothing and home division has been repositioning its ranges and the 46.5 per cent fall in in-store sales was partially offset by 47.5 per cent growth in online sales, which account for a smaller slice. This included a rise in the number of full-price items sold.
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