M&S store with logo
The lack of an earnings upgrade from Marks & Spencer took the shine off an otherwise strong festive update / Image source: Adobe
  • Momentum sustained over Christmas
  • Food the standout performer
  • Growth slowdown, outlook caution weigh on sentiment

One of 2023’s best performing stocks, Marks & Spencer (MKS) sustained its positive sales momentum over the Christmas period with total sales up 7.2% to £3.86 billion and UK like-for-like sales up 8.1% in the 13 weeks to 30 December 2023.

However, shares in the retail bellwether, which had rallied in the run-up to the results, were marked 5.5% lower to 263p as both the food and clothing and home divisions witnessed a sales growth slowdown compared with the first half period.

The lack of an explicit earnings upgrade from Marks & Spencer, and the cautious tone of the outlook statement, took the shine off an otherwise strong festive trading update.


‘Our strategy to reshape M&S for growth has enabled sustained sales momentum across Food and Clothing & Home over the Christmas period,’ insisted CEO Stuart Machin.

In the retailer’s third quarter to 30 December, like-for-like food sales fattened up 9.9%, a slowdown on the 11.7% seen in the first half but impressive given a demanding prior year comparative, as Marks & Spencer ‘led the market on volume growth every month with a circa 7% increase across the quarter, and served more customers than ever before’, according to Machin.

Marks & Spencer proved the top performing grocer in volume growth terms over the Christmas period as shoppers snapped up the retailer’s fresh foods and ‘Remarksable’ value lines.

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Like-for-like clothing and home sales increased by a solid 4.8%, albeit a deceleration from the 5.5% growth delivered in the first half, underpinned by reduced promotions year-on-year.

Womenswear stood out for its significant volume and value growth ahead of the market.


There was disappointment in the international business, where sales dropped 6.4% to £288 million due to the planned timing of franchise shipments in the Middle East and Asia and ‘more challenging’ market conditions in India.

Marks & Spencer also failed to deliver the full year profit upgrade investors were hoping for in its cautious outlook.

‘As we enter the new year and full year 2025,’ said the company, ‘expectations for economic growth remain uncertain, with consumer and geopolitical risks. We also face additional cost increases from higher than anticipated wage and business rates related cost inflation. Nevertheless, the strong Christmas trading performance provides confidence that the results for the year will be consistent with market expectations.’

The strong festive showing did encourage house broker Shore Capital to nudge up its pre-tax profit forecasts for the years to March 2024 and 2025 by £20 million apiece, to £665 million and £695 million respectively.


‘After a quite remarkable calendar year 2023 with two especially material upgrades to earnings announced,’ commented Shore Capital, ‘we sense M&S is arriving at a point where more normalised expansion and sequential earnings and dividend growth can be expected, which should more sedately be followed by capital appreciation of the group’s equity. That said, if Mr Machin can expedite his plans for modernisation at pace there should still be plenty of upside in the journey of M&S equity.’

Russ Mould, investment director at AJ Bell, said: ‘Chief executive Stuart Machin has echoed previous statements that more work is needed to transform the business. The latest update would suggest the company’s turnaround programme remains on track but it is understandable that the boss wants to manage expectations and not let anyone assume it’s going to be an easy ride from now on.’

DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Martin Gamble) own shares in AJ Bell.


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Issue Date: 11 Jan 2024