M&S trading update shows continuing strength, womenswear outperforms

M&S trading update shows continuing strength, womenswear outperforms

M&S’s Christmas and Q3 trading statement was probably the worst-kept secret in UK retail, as far as knowing that the company was going to report a stellar season is concerned.

But the exact detail was kept well under wraps and on Thursday the company reported that sales in the third quarter (the 13 weeks to 30 December) sustained the strong sales momentum it had been seeing for most of 2023.

Overall, it said group sales rose 7.2% to £3.856 billion. That may not be a massive jump but compared to the performance in the wider UK retail sector it was a strong one.

The crucial Clothing & Home division that had long been a problem for the retailer rose 4.8% on both a total and like-for-like basis to £1.236 billion.

And the larger food division rose 10.5% to £2.332 billion (9.9% like-for-like) , which is impressive given how 2023 was seen to be all about consumers reining in their luxury food purchases in favour of basics. M&S foods are at the higher end of the price scale.

It meant total UK sales rose 8.5% to £3.568 billion. However, it wasn’t all figures and Clothing & Home International sales fell 6.4% to £288 million.

The company explained that this was “largely driven by the planned timing of franchise shipments in the Middle East and Asia”, but it also highlighted more challenging market conditions in India”. And it said it’s “reviewing our priorities, working with our franchise partners, to improve performance”.

But there’s no denying that the core UK operation is going from strength to strength and CEO Stuart Machin said: “Our strategy to reshape M&S for growth has enabled sustained sales momentum across Food and Clothing & Home over the Christmas period.

“In Clothing & Home, we delivered a good performance with sales growing ahead of the market and less stock going into sale. Womenswear has been the standout, growing volume and value significantly ahead of the market. Style perception continued to improve and we maintained our lead on quality and value, delivering an increase in full-price sales mix and our highest full-price market share for over a decade.”

Clothing & Home like-for-like sales were “driven by growth in average selling price, partly a result of reduced promotions year-on-year”. Market share increased, “led by the strong performance of womenswear, supported by improved customer perceptions of style, quality and value”.

Within the division, store sales increased 2%, with new full-line stores performing ahead of plan. And online sales grew 10.9%, with improved carrier service levels compared with last year and strong demand for click & collect.

The company said that “Knitwear, denim, and top-of-range Autograph lines performed well”. As mentioned, the full-price sales mix improved and stock going into its clearance sale reduced 6% year-on-year.

And on that subject, M&S said that “with a deeper initial cut in line with our objective of a shorter clearance sale, sell-through rates have been encouraging”.

Machin added that “we enter 2024 with a spring in our step, but clear eyed on the near-term challenges. We are determined to deliver our objective of driving 1% growth in market share in both businesses and to up the pace of our transformation: keeping a relentless focus on trusted value; accelerating our store rotation and renewal plans; doubling down on our supply chain programmes to improve availability and lower costs; and resetting our data, digital and technology strategy to unlock benefits in future years.

“Our vision is to be the most trusted retailer, doing the right thing for our customers, with quality products at the heart of everything we do, and we are just at the beginning of what we can achieve. Lots done, lots to do, lots of opportunity ahead.”

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