M&S Christmas sales slide as retailer warns of Brexit red tape’s ‘significant impact’

Marks & Spencer’s sales fell more than 7 per cent in the run-up to Christmas as the retailer suffered from the November lockdown in England and tightened restrictions across much of the rest of the UK.

Clothing and home sales plunged 24.1 per cent while the food division grew 2.6 per cent in the final quarter of the year. During the English lockdown food and non-food sales were down 4.5 per cent and 40.5 per cent respectively.

M&S said the pandemic continues to change people’s shopping habits with clothing sales skewed heavily towards sleepwear and leisurewear.

The high street favourite also revealed it had been hit by Brexit red tape with Percy Pig sweets falling foul of EU rules of origin. The rules slap tariffs on goods that the UK exports to the EU which were not produced in the UK.

M&S boss Steve Rowe warned that some products sold to customers in EU states would attract tariffs and require very complex administrative processes.

He said the UK’s new trading relationship with the EU would “significantly impact” M&S’s businesses in Ireland, the Czech Republic and France.

However, he said that, in spite of the Brexit and Covid knocks, M&S had a “robust” Christmas 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.”

Looking forward, Mr Rowe said: “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.”

On the food division, the retailer 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. This included a rise in the number of full-price items sold.

International revenues dropped 10.4 per cent due to global Covid-19 restrictions, and the company warned that the new free trade agreement between the UK and the EU is causing problems with “potential tariffs on part of our range exported to the EU, together with very complex administrative processes”.

Additional reporting by PA