Marks and Spencer strong Christmas trading demonstrates continued improvements to product and value

Marks and Spencer

Marks and Spencer Group plc (LON:MKS) has announced its Christmas 2021/2022 Trading Statement.

Third quarter sales, constant currency£mChange vs 20/21 %Change vs 19/20 %
    
Food1,91510.012.4
Clothing & Home1,08437.73.2
Total UK2,99918.68.9
    
International27217.45.1
    
Group       3,27218.58.6
Memo:   
Clothing & Home online3612.350.8
Food ex hospitality and franchise1,7066.716.4

The impact of Covid in 2020/21 renders comparisons to the prior year less meaningful. To aid understanding, throughout this document the comparative period in commentary relates to the 13 weeks to 28 December 2019.

·      Food sales increased 12.4%, with sales excluding hospitality and franchise up 16.4%. Retail parks and Simply Food stores continued to outperform. Encouragingly, the larger basket sizes we saw in the first half continued through the Christmas period as customers used M&S for more of their everyday shopping. As a result, Marks & Spencer was the fastest growing major store-based Food retailer in the period. The business generated its highest ever Christmas sales with December growth in line with the performance for the quarter. In addition, although not included in these numbers, M&S products performed strongly on Ocado.com, representing c.30% of baskets in December.

·      Clothing & Home sales increased 3.2%. Full price sales grew by 45% as we maintained our trusted value trading stance, reducing the amount of product sold on promotion by 66% and stock into sale by 21% compared to 2019/20. Online sales continued to be strong, with growth of 50.8% supported by substantial expansion of in-store fulfilment. Store sales were down 10.8% on 2019/20 with retail parks up, continuing to outperform stores in city centres.

·      International sales increased 5.1%, with online sales more than doubling. Performance was driven by Clothing & Home growth in the Republic of Ireland and key markets such as India after Covid related restrictions were eased. In addition, we generated strong growth through online marketplaces and in franchise shipments to the Middle East.

·      During the period, the Group further strengthened its balance sheet and liquidity position. We repaid the December 2021 bond maturity through cash and signed a new £850m Revolving Credit Facility maturing in June 2025. In addition, we disposed of two warehouses for a total cash consideration of £42.5m.

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·      In November, we indicated that we expected the strong trading we had seen in the early part of the quarter to be sustained.  As a result of our performance in the balance of the period, we are more confident of our ability to deliver the increased guidance we set, and now expect full year profit before tax and adjusting items of at least £500m. This assumes no further material restrictions or lockdowns.

We will report full year results for the 52 weeks ended 2 April 2022 on 25 May 2022. Given the impact of Covid in 2020/21 renders comparisons less meaningful, results will be presented against the 52-week period in 2019/20, as well as the comparable 52-week period in 2020/21.

Steve Rowe, Marks and Spencer Group plc Chief Executive said:

“Trading over the Christmas period has been strong, demonstrating the continued improvements we’ve made to product and value. Clothing & 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.”

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