Marks & Spencer and Tesco enjoy strong Christmas
Marks & Spencer and Tesco enjoyed a strong Christmas trading period, partly as the rapid spread of Omicron prompted people to eat and drink more at home instead of heading out to restaurants and pubs.
M&S, which is recovering from years in the doldrums, booked its highest ever sales of food and a surge in clothing. Food sales jumped 10% in the three months to 1 January, compared with a year earlier, making it the fastest growing food retailer in the UK.
The strong rise in sales came despite fears of product shortages caused by supply chain difficulties including driver shortages and hold-ups at ports.
Clothing sales jumped almost 40% in the UK and more than 17% overseas despite a fall in sales at its high street stores. The company said the sales growth had come despite cutting discounting by two-thirds.
Steve Rowe, the chief executive of Marks & Spencer, said: “Trading over the Christmas period has been strong, demonstrating the continued improvements we’ve made to product and value. Clothing and home has delivered growth for the second successive quarter, supported by robust online and full price sales growth.
“Food has maintained its momentum, outperforming the market over both 12 and 24 months. The market continues to be impacted by the headwinds and tailwinds that we reported in the first half, but I remain encouraged that our transformation plan is now driving improved performance.”
The boost to food retailers from the Omicron wave was also confirmed by Tesco.
The UK’s biggest supermarket said sales rose 0.6% in the three months to 8 January – compared with the same period a year before. Tesco increased sales on 2020 when supermarket sales were boosted by the closure of hospitality businesses for many weeks across the UK.
Ken Murphy, the chief executive of Tesco, said: “Despite growing cost pressures and supply chain challenges in the industry, we continued to invest to protect availability, doubled down on our commitment to deliver great value and offered our strongest ever festive range.
“This put us in a strong position to meet customers’ needs as, once again, Covid-19 led to a greater focus on celebrating at home. As a result, we outperformed the market, growing market share and strengthening our value position.”
Both companies nudged up their forecasts for the full year, but investors were underwhelmed in early trading as fears over inflation mount. Tesco shares were down 2% while M&S was down 4%.