The spate of Christmas trading updates provided UK retail investors with some much-needed cheerful news, after a generally disappointing year of results within the sector.
M&S, for instance, saw its group sales expand by 5.9% in the third quarter. Even its clothing and home department, very much the Achilles heel of the business in recent reporting periods, was able to generate healthier sales growth of 3.1%.
While the group estimated half of the clothing and home sales growth came from a shift in the reporting period, which added an additional five days during the December sale period, markets responded positively to the news. M&S’ share price opened at 351.4p on Thursday, up 3.2%.
CEO Steve Rowe, who delivered a bombshell to investors last November when he announced M&S would be ditching 30 UK stores and cease trading in ten overseas markets, said in a statement that he was “pleased with the customer response we have seen to the changes we are making in line with our plan for the business.”
Di Palma found the latest update for M&S to be “quite a positive message for the UK” during a time when “the clothing market is in turmoil.” Despite this, she said M&S’ Q3 sales figures were not necessarily an indicator for strong growth ahead.
“One quarter does not make a trend. There could be a variety of reasons to explain M&S’ stronger clothing sales. Competitor Next’s last collection could have been less inspiring for consumers who then sought out M&S, for example.
“The consumer is very mobile. At the click of a mouse, you can buy from M&S rather than Next or Zara. Every quarter can bring positive and negative surprises.”
Mega-hit online fashion retailer and relative new-kid-on-the-block Asos continued to show up its more traditional retail competitors, boasting total group revenue growth of 36% (£621.3m) in the four months to 31 December.
Its sales outside of the UK, comprising roughly half of the firm’s total sales, were ramped up by 52% over the period, aided by the tailwind from weaker sterling.
