News
M&S sales rise despite impact of the big freeze
Marks & Spencer delivered robust Christmas trading after it benefited from customers trading up on food and clothing, although it lost up to £55m in sales because of the recent snow.
However, the high-street bellwether gave warning of "more challenging" trading conditions in the wake of pressure on consumers from the rise in VAT last week and the impact on jobs of savage public-spending cuts.
The retailer, which has more than 600 UK stores, posted a 2.8 per cent rise in UK like-for-like sales for the 13 weeks to 1 January. Its sales growth was ahead of City expectations of a 2 per cent rise, but behind the 4.4 per cent M&S delivered in the half year to 2 October. While the privately owned John Lewis and House of Fraser deliverer stronger underlying sales during Christmas, a number City analysts were encouraged that M&S reaffirmed existing guidance on profits for 2010/11.
Philip Dorgan, at Altium Securities, said: "These numbers show that M&S can cope with extremely well with difficult trading conditions."
Several retailers – including the maternity retailer Mothercare, the fashion group Alexon, and the upmarket jeweller Theo Fennell – have blamed the snow for recent profit warnings.
The snow is thought to have knocked an estimated £50m to £55m off M&S's sales during the quarter, equal to about 1 per cent on food and 3 per cent on general merchandise, which is dominated by M&S's clothing. However, the retailer said the fall on general merchandise was largely offset by M&S including the first five days of this year's clearance sale in the reporting period to 1 January, as opposed to last year.
Marc Bolland, the chief executive of M&S, said that customers had continued their "buy well, buy once" trends on clothing and "innovation was the stand-out story" on food. M&S increased UK general merchandise sales by 3.8 per cent and while the retailer said it delivered growth across all areas, it was helped by shoppers trading up. Mr Bolland said: "What we have seen in the last quarter is that people are buying at a higher price point. They are interested in more quality products [and] there is a little bit of a shift in the mix of people buying upwards so more people are buying cashmere."
More Independent
Posted on Wednesday 12th January 2011
Please login or register below to manage your details and job applications.
