M&S beats Christmas sales forecast in clothing and homeware

M&S beats Christmas sales forecast in clothing and homeware

M&S beats Christmas sales forecast in clothing and homeware

  • 12 January 2017

  • From the section Business

M&S storeImage copyright PA

Marks and Spencer has reported a rise in Christmas clothing and homeware sales for the first time in two years.

Sales in the division rose 2.3% - well above expectations for about 0.5%.

The figures came on a bumper day for retail results, with trading updates from Tesco, John Lewis, Debenhams and Primark owner ABF.

Marks and Spencer's chief executive, Steve Rowe, said "better ranges, better availability and better prices" had helped sales to recover.

But growth was helped by the timing of Christmas this year, which meant there were extra shopping days.

Food sales were up by 0.6%. That compares with Tesco's food sales growth of 1.3%, while Sainsbury's food sales were down slightly.

'Super Thursday' Christmas trading updates

Tesco hails 'strong progress' as sales rise

'Green shoots'

M&S estimated that the timing of Christmas had added about 1.5% to the clothing and home sales growth and about 0.3% to food.

But Mr Rowe warned timing would be against them for the next trading update: "As we look forward, our Q4 [fourth quarter] reported numbers will be adversely affected by sale timing and a later Easter."

Image copyright Reuters

Analysis: Dominic O'Connell, Today programme business presenter

Marks & Spencer has turned out to be this year's surprise Christmas package.

In a festive season where most of our big retailers did better than expected, M&S stood out, finally shrugging off its clothing sales hoodoo.

Clothing sales have been in decline - and often sharp decline - for the last five years, with the exception of one positive quarter two years ago.

Over Christmas, however, like-for-like sales were up 2.3%, although the company was quick to point out that 1.5% of that was down to how Christmas fell, which meant there were five extra trading days compared to the relevant period a year earlier.

Even so, a 0.8% increase is not to be sneezed at, and is evidence perhaps that the back-to-basics reforms of chief executive Steve Rowe, which include hundreds of job losses at head office and the closure of most of the international stores, is having some effect.

Analysts broadly welcomed the latest results. Bryan Roberts, global insight director at TCC Global, told the BBC: "It might be the sign of some green shoots in that part of the business."

The improved performance comes after a poor set of figures for Christmas 2015. Then, like-for-like sales in food rose 0.5%, while turnover from its clothing and homeware lines plunged by 5.8% because of "unseasonal conditions and availability".

On the same day as those figures were announced, M&S said that chief executive Marc Bolland was stepping down and Steve Rowe - then the director of general merchandise division - would replace him.

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Mr Rowe has taken action, including cutting prices for nearly a third of the ranges and increasing staff numbers on the shop floors.

In September, Mr Rowe said more than 500 senior jobs would be cut, and, two months later, announced plans in November to close around 30 UK stores and convert 45 more into food-only shops.

The retailer also announced plans to close some of its overseas stores.

Image copyright EPA

Among the other key trading updates on Thursday, the John Lewis Partnership said like-for-like sales at its department stores had risen 2.7% over Christmas, while its Waitrose supermarket chain chalked up a 2.8% gain.

However, it warned that its staff bonus would be "significantly lower" this year because of the "challenging market outlook", adding that trading profit was "under pressure".

John Lewis staff are partners in the company and own the business. Last year, the bonus pool for its 91.500 staff totalled £145m, with an average payout of £1,585.

Department store chain Debenhams said its UK like-for-like sales were up 1% over Christmas, with online sales up 13.9%.

Debenhams' main ranges are in the beauty and gift sector, which make up 57% of its sales. It said it had maintained market share in a "competitive clothing market" and had also cut down on its ranges while discounting less.

Online fashion retailer ASOS reported strong sales growth, partly thanks to the steep fall in the pound since the Brexit vote.

It is now expecting full-year sales to be 25% to 30% higher after international figures leapt 52% in the four months to the end of December. UK sales were up by 18%.