M&S sales rise but year ahead set to be harsh

MARKS & SPENCER saw sales rise in the key Christmas period but the retailer warned that 2011 would be tough, with austerity measures and the spectre of inflation rises to take their toll.

Same-store sales rose 2.8 per cent in the UK in the 13 weeks to 1 January despite the impact of the snow.

Total sales were up four per cent with clothing the best performer with a 4.7 per cent jump.

New chief executive Marc Bolland urged caution over the fragile state of the economy and played down the idea that its older, more affluent customers make the company recession proof.

However, he said he was confident that the company had the correct product range to entice customers.

“We don’t expect people to hold back massively now. There is a healthy interest in new product,” he said. Meanwhile the company’s chief finance officer, Alan Stewart, said he hoped food price inflation could be pegged under two per cent to help the retailer to be as competitive as possible. Bolland, the former head of Morrisons, is expected to have a major impact on M&S food sales.

M&S also warned that the soaring cost of materials, particularly cotton, was putting pressure on the price of its goods.

J SAINSBURY WINS IN MARKET SHARE

J SAINSBURY emerged as the Christmas winner of the big four supermarkets yesterday as it saw its market share rise again in the 12 weeks ended 26 December, according to Kantar Worldpanel market share data. The UK’s third largest supermarket retailer, saw its market share rise to 16.6 per cent over the 12-week period, from 16.3 per cent a year earlier – its 23rd consecutive rise. Rival Tesco’s market share was unchanged on last year at 30.5 per cent. The UK’s second largest retailer, Asda, owned by Walmart, saw its market share slip to 16.8 per cent, from 16.9 per cent a year earlier. Wm Morrison Supermarkets share also fell slightly to 12.2 per cent, from 12.3 per cent for the 12 weeks ended 27 December 2009. Waitrose's market share rose to 4.2 per cent, from 4 per cent. Discount retailers Aldi, Netto and Lidl grew ahead of the market with combined market share for the period maintained at 6.1 per cent.

ANALYST VIEWS: WHAT DOES 2011 HOLD FOR M&S?
INTERVIEWS BY JOHN DUNNE

MATTHEW MCEACHRAN | SINGER CAPITAL MARKETS
Even after adjustment, sales are better than many others and only represent a small slowdown from the previous quarter. We believe forecasts will remain broadly unchanged and management has indicated that existing full-year guidance remains unchanged.

FREDDIE GEORGE | SEYMOUR PIERCE
Marc Bolland’s proposed shake-up of the company will be more revolutionary than evolutionary and the market will come to appreciate this over the next 12 months. We say Buy.

RICHARD HUNTER | HARGREAVES LANSDOWN
The business continues to plot its way through a difficult course and whilst the update is not stunning, it is progressive. The provision of quality clothing has played well.