M&S rings up better-than-forecast festive sales but cautions on Red Sea impact
The high street stalwart expects disruption to the Suez Canal shipping route to delay new clothing and home stock due in February and March.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Marks & Spencer has emerged as a festive winner after better-than-expected Christmas sales, but cautioned over stock delays and cost increases from the Red Sea shipping attacks.
The high street stalwart became the latest retailer to warn on ongoing issues impacting the important Suez Canal shipping route, with expectations that it will delay new clothing and home stock due in February and March.
It does not expect much impact on the food arm, but said the disruption – which is forcing ships to bypass the Red Sea and take longer routes – could push up costs in its clothing and home business.
Our plan is not to increase prices in clothing and home - yes, there may be some cost increases to us from the Red Sea issue, but it's a bit too early to call that out yet
Chief executive Stuart Machin said: “We’re conscious of the cost and availability of new ranges.”
He said the Red Sea disruption was “impacting everyone and something we’re very focused on”.
He added: “Our plan is not to increase prices in clothing and home – yes, there may be some cost increases to us from the Red Sea issue, but it’s a bit too early to call that out yet.”
The comments came as M&S beat forecasts with a 9.9% hike in like-for-like festive sales across its food arm, with growth of 4.8% in its clothing and home division in the quarter to December 30.
It meant like-for-like sales grew 8.1% overall and marked its 11th quarter in a row of growth.
The group also offered some cheer to more than 9,200 staff who are set to get bumper payouts next month under a share scheme, thanks to a resurgent stock market performance over the past year.
M&S said employees – mostly customer service assistants – who put a typical £150 a month into its 2020 share-save scheme will gain more than £10,000 when it pays out on February 1.
Some of the group’s festive trading growth was driven by price inflation, but M&S said food sales by volume rose around 7% and it increased prices by less than the wider market.
We enter 2024 with a spring in our step, but clear eyed on the near-term challenges
It said it could not guarantee food prices would not rise over the year ahead, but was investing heavily in efforts to keep costs down for shoppers.
Mr Machin said: “We enter 2024 with a spring in our step, but clear eyed on the near-term challenges.”
Shares in the group eased back by 5% as it added a note of caution over the outlook.
M&S said: “As we enter the new year and 2024/25, expectations for economic growth remain uncertain, with consumer and geopolitical risks.
“We also face additional cost increases from higher-than-anticipated wage and business rates-related cost inflation.
“Nevertheless, the strong Christmas trading performance provides confidence that the results for the year will be consistent with market expectations.”
Mr Machin said M&S planned to “up the pace” of its overhaul, ramping up its store changes and revamps, “doubling down” on measures to improve its supply chain and availability and to lower costs.
It was targeting a 1% increase in market share across both businesses.
Mr Machin revealed the group was also reviewing its Sparks loyalty programme, which now has 18 million customers signed up, but said he was not planning to bring in loyalty card pricing.
More details on the review were expected alongside its annual results later this year.
The firm said it had seen strong demand for its Remarksable food value ranges over Christmas, with sales up around 18%, but that womenswear had been the star performer.
Across clothing and homeware, it said store sales rose 2%, while online growth reached 10.9% thanks to strong take up of its click-and-collect service, while it was left with less sale stock – down 6%.