Food gives a tasty fillip to M&S but its key womens’ market slides

M&S said same‑floorspace food sales jumped 3 per cent in the 13 weeks to end‑December. This was in stark contrast to the more value‑led supermarket major Morrisons, which posted a meagre 0.7 per cent rise in Christmas sales on Monday.

It took the rise in M&S’s total food sales in the period to 4.5 per cent, as chief executive Marc Bolland said party food and desserts performed particularly well. The group sold some 33 million mince pies, while turkey sales rose 25 per cent.

The robust food performance, which accounts for half of the company’s turnover, offset a 1.8 per cent fall in general merchandise like‑for‑like sales, which are mainly clothing.

Bolland said menswear had done well and kidswear had its “biggest ever quarter”, with sales up 14 per cent. Men’s formal wear outperformed, with 40,000 black tie dinner suits sold at £59. But Bolland said womens’ clothing had come under pressure partly through women putting off purchases for themselves to spend Christmas money on children, and partly through fierce discounting in the high street.

“It [womenswear] was where everyone on the high street started playing on price,” Bolland said. “Women also put kids first in tough times. And kids were important around Christmas to give them something special.” M&S’s total clothing sales grew 1.1 per cent.

Home sales slumped over 13 per cent, mainly hit by the group’s decision to stop selling technology in its stores in early 2011.

Bolland said the company had responded to difficult trading conditions with its own price discounting that would be offset by £30 million of efficiency savings, ranging from administration to suppliers, over the current financial year.

“We moved with the market,” Alan Stewart, group finance director said, referring to M&S’s price promotions in the run‑up to Christmas. However, the company confirmed that continued selective discounting in clothing would result in an unquantified fall in gross profit margins.

M&S showed decent growth in both its international sales – with the main focus on India and Shanghai – and online trade, with revenues up 8 per cent and more than 22 per cent respectively.

But on home territory, the company said 2011 would be challenging, although its expectations for full-year profits, which will be posted in May, remained the same. “Customers recognise there is another tough year ahead,” Stewart said.

One analyst said: “M&S’s food performance in particular shows Christmas was by no means a disaster. But, equally, clothing and homewares pressures showed it is by no means immune to what is now happening in the wider high street.”