Marks and Spencer have reported a modest increase in UK sales over the Christmas period, after strong food sales balanced weaker trading elsewhere at the commercial property company.
The company also said margins would be lower this year because of promotions.
Elsewhere, commercial property retailer Debenhams said sales were flat over the Christmas period, while Game Group saw sales take a nose-dive.
The British Retail Consortium (BRC) said December retail sales in the UK rose by 2.2 per cent after a “dazzling” final week before Christmas. However, the group said the figure was boosted by the comparison with weak sales a year previously and by heavy discounting.
‘Cautious’ outlook
Marks and Spencer said it had performed well in a “challenging trading environment”. Like-for-like sales, which take out the impact of any new store openings, for the final 13 weeks of 2011 were up 0.5 per cent on a year previous. Food sales were up 3 per cent, however general merchandise sales fell by 1.8 per cent.
The drop in general merchandise sales was not helped by a 13.3 per cent fall in sales in its home division, which the firm blamed on its decision to stop selling technology products.
Total sales at its direct delivery business soared by 22.4 per cent after it extended its delivery deadline and launched an online Christmas food order service. Sales also rose by 8.1 per cent outside of the UK.
M&S boss Marc Bolland said: “Our food business performed very strongly as customers enjoyed our new and traditional Christmas products.”
He further added: “In clothing, our focus was on offering our customers real value at a time when they’re managing their budgets carefully. Our trading strategy worked well, delivering a record performance in many categories including menswear and sleepwear.”
The commercial property retailer said it anticipated trading conditions to remain challenging and was “cautious” about the year ahead. It added that it expected to reach its profit targets for the year.
Analysts also stressed the likely impact of discounting on profits. Neil Saunders at retail research group Conlumino said: “Overall, this is a subdued set of results. There is no denying that growth has, to a degree, been bought at the expense of margin.”
Mr Saunders further added: “These results demonstrate that while M&S is far from being in the premiership in growth terms, it can still play a reasonably good game.”
Elsewhere on the High Street, department retail chain Debenhams said like-for-like sales in the 18 weeks to 7 January had been flat. The retailer said it was “pleased with this performance,” as Chief Executive, Michael Sharp said: “We traded well despite the difficult environment as evidenced by strong sales in December, including record sales in the final week before Christmas.”
The BRC said its sales numbers for December were boosted by the comparison with weak sales a year previous, which were hit by snow.
Sales last month were also heightened by heavy discounting as commercial property retailers cut profit margins in a last-minute effort to clear stock ready for the new season.
Director General of the BRC, Stephen Robertson, said: “A better-than-hoped for December closed a relentlessly tough year for retailers, but these figures hinged on a dazzling last pre-Christmas week and were boosted by some major one-off factors.”
He further added: “We’re not witnessing any fundamental change in customers’ circumstances.”
