By Paul Sandle
LONDON (Reuters) – Marks & Spencer’s chief executive said on Thursday he would work to mitigate higher costs and consumer caution in the months ahead, even after the retailer delivered the best results on the UK high street for the all-important Christmas season.
M&S shares, which have risen more than 30% in the last 12 months, on Thursday fell 5%, despite the better-than-expected 8.9% rise in food sales.
The increase, it said, made it the top performing store-based grocery retailer at Christmas, the most profitable time of year for the sector.
Chief Executive Stuart Machin said there was “much within the group’s control” to offset headwinds that all retailers face this year, including increases in taxes and wage costs from April.
Already, he said M&S had carried the momentum from a strong trading performance throughout 2024 into Christmas.
“Sales records were broken across the business, with Food recording its biggest day and Clothing, Home & Beauty online its biggest week, but we’re not complacent – as a growth business it’s our job to break records,” he said.
Tesco, Britain’s biggest food retailer, reported a 4.1% rise in underlying Christmas sales on Thursday.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said M&S and Tesco had both pointed to booming food sales.
“But the year ahead won’t be all smooth sailing for the retail giants, as the sector gears up to battle imminent tax hikes,” he said.
M&S grew sales in clothing, home and beauty by 1.9%, outperforming a wider market decline, helped by demand for velvet party wear and its best-selling denim and knitwear categories.
The 141-year-old company gained about 0.5 percentage points in clothing, taking its share to around 11%, Machin said.
Analysts had expected the company to report a 7.8% rise in food sales and a 0.7% rise in clothing and home sales for the 13 weeks to Dec. 28, according to a company-compiled consensus.
M&S said in November it expected a 120 million pound ($148 million) headwind from higher taxes and wage costs from April.
($1 = 0.8134 pounds)
(Reporting by Paul Sandle; Editing by Kate Holton and Barbara Lewis)
