M&S upbeat on strong Christmas trading performance

Marks and Spencer reported a “strong” Christmas trading performance in an update on Thursday, with food sales ahead 10.2% year-on-year, or 6.3% on a like-for-like basis.

The FTSE 250 retailer said it outperformed the food market in both value and volume, with the investment made in ‘Remarksable Value’ resulting in “very strong growth” in volumes, as those lines were now in more than 20% of baskets.

Alongside that, the board said sales of its top-tier ‘M&S Collection’ also grew by more than 20% for the 13 weeks ended 31 December.

The business generated its largest-ever Christmas sales of over £80m on 23 December, supported by improved availability and strong sell-through of seasonal lines including turkeys, where the firm said it retained its leading market share for the third year in a row.

Sales in new renewal stores performed well, with strong initial sales growth in stores such as London Colney and Oatlands Harrogate.

While not reported in the numbers, M&S said its volumes through Ocado Retail represented 30% of the average basket at Ocado over the Christmas peak.

Marks and Spencer owns 50% of Ocado’s UK retail operation, in partnership with the online grocery and warehousing technology company.

Clothing and home sales, meanwhile, improved 8.8% year-on-year for the quarter through December, with like-for-like sales ahead 8.6%, and performance “well ahead” of the market.

The company said clothing and home achieved over 10% market share in the period - its highest level since 2015.

Store sales increased 12.8%, with standout early performances noted from new stores such as Colchester and Chesterfield as part of the company’s store rotation programme.

Online sales increased 0.7%, driven by growth of 33% through the M&S app, with a “strong performance” of click and collect sales.

Marks and Spencer said it generated “particularly strong sales growth” in menswear, while formalwear increased over 40% and partywear more-than-doubled.

Sales of third party brands grew around 50%, and represented about 8% of online sales in the period.

Stock-into-sale was in line with plan, and clearance rates to date were described as “strong”.

International sales increased 12.5% at constant currency, with strong retail sales growth in key franchise markets in the Middle East and owned markets including India.

Looking at the balance sheet, the firm said that during the period it further strengthened its balance sheet and liquidity position by extending its £850m revolving credit facility by one year, to June 2026.

Marks and Spencer said there were “clear” macroeconomic headwinds ahead and underlying cost pressures, but noted that its strong performance provided confidence that the results for the year would be consistent with the guidance it set at its interim results in November.

“M&S sustained trading momentum through the peak quarter and both food, and clothing and home have delivered strong growth,” said chief executive officer Stuart Machin.

“M&S Food outperformed the market on volume and value in the critical four-week Christmas period for the second year running and reached its highest ever recorded market share.

“Clothing and home delivered another outstanding performance, maintaining its market leadership position with its highest market share in seven years.”

Machin said the outperformance was driven by M&S “doing what it does best”, adding that thanks to “quality, innovation and growing style credentials”, more customers shopped with M&S over the Christmas period than in recent years.

“We saw the benefits of the acceleration in the steps we're taking to reshape M&S as an omnichannel retailer supported by an increasingly promising store rotation programme.

“Our new full-line and renewal stores outperformed expectations, while click and collect orders increased 20%, and the competitive advantage of M&S's omnichannel platform was demonstrated by delivering c.50% growth in third party brand sales.”

That, Stuart Machin said, was supported by “substantial growth” in monthly active app users to around five million.

“Given the inflationary pressures impacting our customers and our business, M&S is taking action to structurally reduce costs and reinforce our customer proposition.

“Our singular focus is on delivering the M&S Reshaped programme to drive growth and value creation as the UK's leading omnichannel retailer.

“This performance across both our businesses provides confidence in delivering our full year results.”

Marks and Spencer said it would report results for the 52 weeks ending 2 April on 24 May.

Reporting by Josh White for Sharecast.com.