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Marks & Spencer has boasted a turnaround of its clothes division, helping the retailer record a successful Christmas period along with record food sales.
Fashion revenues, which have long been typically a thorn in the side of the retailer, were up 3.2pc to £1.1bn on pre-pandemic levels, despite a 10pc fall in sales at its stores.
Internet orders were 50pc higher on a two-year basis as M&S started to sell more third-party brands such as Ghost, Nobody’s Child and Jaeger.
It recorded its highest market share of full-price clothes sales since 2013.
Pippa Stephens, a retail analyst at GlobalData, said: “While clothing and home has formerly been M&S’ main handicap, it has now seemingly turned a corner in its overhaul.”
Meanwhile, strong demand for items such as fresh turkeys and light-up snow globe bottles of gin helped the 138-year-old retailer post record December food sales.
Steve Rowe hailed “improvements we’ve made to our product and value” as he spearheads the revival of the company after several false dawns.
“I remain encouraged that our transformation plan is now driving improved performance.”
The chain has been simplifying food prices in a bid to get more customers to do their weekly shopping at M&S and has revamped its more outdated clothing and home offering.
Food sales were up 12.4pc to £1.9bn on pre-pandemic levels, not including items sold via Ocado Retail, half owned by M&S.
Analysts at Peel Hunt said: “There is decent momentum here and if the consumer does not go underground, we expect M&S to carry on that improvement.”
Group sales rose 18.5pc to £3.2bn in the 13 weeks to Jan 1 compared with the same period in 2020, and were 8.6pc higher than the 2019 figure.
M&S was also helped by Britons eating and drinking more at home during the festive period instead of heading out to restaurants as omicron spread.
In May 2019, the company announced plans to shut about 120 clothes stores by April 2024 as it modernised the wider estate.
Asked if high street stores were in a state of managed decline, Mr Rowe said: “Overall, the trajectory is for a third of the [clothes] business to be online... one day it will be 50pc, we continue to see it grow. Over a longer period of time store sales will be lower.”
However, he added that larger shops in retail parks outperformed stores in city centres during the period, and the Simply Food outlets were also doing well.
Like its rival Next, M&S warned of higher prices for clothes and shoes in the coming months as inflation bites and cost pressures build.
Eoin Tonge, the finance chief, said: “There is currently very little in terms of what customers are seeing [price rises], but the tides of inflation are coming as freight and raw materials costs creep higher.
“We’re set up to try to offset it, but inevitably some will be passed on. We will make sure the customers are getting the right value for the products they’re buying.”
The retailer upgraded profits twice this financial year, saying in November that it expected annual profits of about £500m. On Thursday, it said it will make profits of “at least £500m”.
Shares fell more than 7pc to 233p, reflecting investor disappointment that the upgrade to profits was not higher.