M&S Christmas trading disappoints investors

Marks & Spencer on Wednesday announced a 6.8 per cent fall in the company’s share price. M&S reported slight UK sales growth, from stores open at least a year, of 0.8 per cent in the 13 weeks to December 26. That was less than the consensus of analysts’ forecasts of a 1.2 per cent increase. Like-for-like sales of general merchandise, including clothing, rose 1.2 per cent, less than analysts’ expectations of 1.9 per cent.

“It is not exactly a strong recovery,” said Tony Shiret, analyst at Credit Suisse. M&S said that adjusting for the fact that the 2009 figures excluded the first day of the post-Christmas sale, UK like-for-like sales were 1.8 per cent higher, while general merchandise sales were up 3.2 per cent, both ahead of consensus forecasts.

“We are ahead of expectations,” insisted Sir Stuart, who will later this year hand over the chief executive role to Wm Morrison’s Marc Bolland. “It’s a better Christmas than anyone would have put a prediction in an envelope for this time last year,” Sir Stuart said.

Competition remains intense in the clothing market where rivals, such as Next, are also sharpening their ranges. Next is estimated to have delivered like-for-like sales growth, including online, of almost 5 per cent in the 13 weeks to December 24.

Many retailers, including Sir Stuart, are concerned that consumer confidence could be hit by uncertainty over a general election and efforts to cut Britain’s debt burden once a new government is in place. “Its going to be a headwind coming through this year. It may not be a serious headwind until the back end. Maybe next Christmas will be tougher,” he said.

Image: M&S shopper