M&S and Tesco hail strong Christmas performances – business live

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Marks & Spencer has hailed a strong Christmas as the UK retailer’s turnaround strategy starts to pay off….. as supermarket chain Tesco upgrades its profit outlook.

M&S’s UK sales jumped by 8.9% in the last quarter, compared to pre-pandemic levels two years ago, a trading update just released shows.

In the last 13 weeks of 2021, food sales were 12.4% higher than in the last quarter of 2019, with M&S’s Retail parks and Simply Food stores “continued to outperform”.

Basket sizes increased, as customers used M&S for more of their everyday shopping — perhaps splashing out on more high-end food to celebrate Christmas after a tough year.

Clothing & Home sales, which have long been a problem area for M&S, rose 3.2% compared with two years ago.

M&S says it is now “more confident” of hitting its recent upgraded profit forecasts of £500m — unless new material restrictions or lockdowns are imposed.

M&S’s chief executive, Steve Rowe, 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.”

In what retail analysts are calling Super Thursday, Tesco has raised its profit outlook for the second time in four months.

The UK’s biggest supermarket has reported a rise in Christmas sales, and declared that its market share is now the highest in four years.

Tesco’s UK like-for-like sales rose 0.3% year-on-year over the Christmas period, and were 8.8% higher than two years ago — showing how grocers’ sales have benefitted from the pandemic.

Tesco says that it now expects retail operating profits slightly above its previous guidance, after stronger than expected sales this year.

Tesco CEO Ken Murphy says:

“We are delighted that we were able to help our customers have a great Christmas.

Despite growing cost pressures and supply chain challenges in the industry, we continued to invest to protect availability, doubled down on our commitment to deliver great value and offered our strongest ever festive range.

This put us in a strong position to meet customers’ needs as, once again, COVID-19 led to a greater focus on celebrating at home. As a result, we outperformed the market, growing market share and strengthening our value position.

ASOS and Card Factory are also reporting results (we’ll get to them shortly…)

Yesterday, supermarket group J Sainsbury, sportswear/fashion firm JD Sports and homeware chain Dunelm alo lifted their profit forecasts

Today we also get the latest US jobless figures, which may show an impact from omicron on America’s labor market.

Britain’s Office for National Statistics releases its weekly healthcheck on the UK economy, covering indoor dining, store shortages, credit card spending and gas prices (among other indicators)

European stock markets are set for a subdued start, after US inflation hit its highest level since 1982 yesterday.

The agenda

• 9.30am GMT: Weekly UK business insights and economic activity data
• 1.30pm GMT: US weekly jobless figures
• 3pm GMT: Federal Reserve governor Lael Brainard’s Senate hearing on her nomination to become Fed vice chair