- Sales up by 7 per cent
- In-person shopping back in vogue
Marks & Spencer (MKS) increased its market share over Christmas, with both food and clothing sales growing strongly. However, the retailer made no reference to profit margins and was vague on cost pressures.
In the 13 weeks to 31 December, like-for-like food sales rose by 6.3 per cent, and clothing and homeware sales grew by 8.6 per cent. As a result, the food division enjoyed its highest ever recorded market share, and clothing and home achieved its highest market share in seven years, rising above 10 per cent for the first time since 2015.
Encouragingly, management reported strong demand for both its value food products and its top tier M&S Collection items. Analysts at Peel Hunt suggested that M&S was poaching customers from Waitrose, “but in general the proposition is currying favour with all types of shopper”. Meanwhile, revenue from menswear and formalwear shot up by 40 per cent, and partywear sales more than doubled.
As at Next (NXT), in-person shopping fuelled M&S’s growth over the festive period. In-store sales increased 12.8 per cent, with standout early performances from new stores in Colchester and Chesterfield. In contrast, online sales only rose by 0.7 per cent.
The trading update is light on detail, however. While the group is confident of meeting full-year profit guidance, it provided no margin figures. It was also vague about its inventory, simply saying that “stock into sale was in line with plan and clearance rates to date have been strong”.
In light of the update, analysts at Peel Hunt raised their profit before tax forecasts from £375mn to £410m for this year, and from £310mn to £410mn for next year. The retailer will publish its results for the year ended 2 April 2022 on 24 May 2022.
Last IC View: Hold, 110p, 9 November 2022