Marks & Spencer Group said the economic outlook is uncertain after the retailer broke sales records over Christmas.
The fashion and homewares company said Thursday that it also faces higher costs from the recent Labour budget.
Shares in M&S fell as much as 8.4 per cent in early trading, having risen 30 per cent in the past 12 months through Wednesday’s close.
The retailer had already warned it faces an extra £120 million (€143 million) wage and tax bill following payroll levy changes by the Labour government. Chief executive Stuart Machin has previously vowed to absorb the costs, saying its supermarket division had no plans to raise prices.
This week, Next said its sales and profit growth will slow this year as it weathers the effects of higher taxes and wages. CEO Simon Wolfson said the retailer is already pushing up prices slightly to cover some of its increased costs.
Still, comparable sales for M&S in the UK and Ireland rose 6.4 per cent in the 13 weeks to December 28th, it said Thursday. That was better than expected, with M&S having its biggest one-day sales record in food.
M&S’s turnaround has been showing sustained improvement for several quarters. Under Machin, the retailer has invested in larger food stores and a more extensive range of items, helping it gain a bigger share of household spending on groceries.
The chain’s clothing division — for many years pilloried for being unfashionable — has also shown continued uplift in demand with comparable sales climbing 1.9 per cent in the third quarter. While partywear performed well, so too did its “heartland categories” of denim and knitwear, M&S said. The clothing division registered its highest online weekly sales tally over Christmas.
The company outperformed expectations and more importantly recorded market share growth in both food and clothing, said Clive Black, an analyst at Shore Capital, a broker to M&S. - Bloomberg
