Marks and Spencer shares dip after bumper Christmas

Marks & Spencer Group PLC reported bumper Christmas trading figures despite the cost of living crisis. The UK-based food and clothing retailer delivered an 8.1% increase in total UK like-for-like sales for the 13 weeks to 30 December 2023 to £3.6 billion. Like-for-like food revenues enjoyed a 9.9% increase to £3.3 billion, boosted by sales of premium Christmas food lines. Group sales rose by 7.2% to £3.9 billion with the figures beating analyst expectations.

Marks and Spencer ‘top performing grocer’

Indeed, Marks and Spencer was the top performing grocer over the Christmas period and quarter in terms of volume growth. The company said this was driven by supply chain improvements and strong growth in its meat, poultry, grocery, produce and in-store bakery lines.

Chief executive Stuart Machin said the company’s “strategy to reshape M&S for growth” had delivered “sustained sales momentum” across the retailer’s food, clothing and home divisions.

“In Food, we led the market on volume growth every month with a c.7% increase across the quarter, and served more customers than ever before,” he told investors. “Core categories grew strongly and renewal stores, which cater to larger basket shops, performed particularly well, as more customers looked to us for more of their full shop. In clothing and home, we delivered a good performance with sales growing ahead of the market and less stock going into sale.”

Sales of its ‘Remarksable’ value food line also grew around 18% over the period. Even the company’s enfant terrible, womenswear, was a “standout”, Machin said, leading the market in terms of volume and value growth.

Marks and Spencer’s Machin: ‘Lots more to do’

While Machin said the company enters 2024 “with a spring in our step,” he said Marks and Spencer still has “lots more to do” to facilitate its turnaround and admitted it had a history of “overpromising and under-delivering”. The company was cautious in its outlook statement, noting that expectations for “economic growth remain uncertain” given continuing consumer and geopolitical-related risks.

Marks and Spencer also says it is seeing increased wage and business rates-related cost inflation. International sales also fell by 6.4% due to issues in the Middle East and India. Management left full-year forecasts unchanged and said the company aims to produce 1% growth in market share in both clothing and food.

Shares in Marks and Spencer are up 80% this year to 262p. Investors may wish to take some profits, given the shares are trading near their five-year highs. However, there could be further momentum in the stock. Analysts at broker Barclays think the shares could reach 300p.

Past performance is not a guide to future performance