M&S Sees Record Sales Boosted by Ocado, But Fashion Faces Challenges

Marks & Spencer (M&S) reported a “solid” Golden Quarter, encompassing the 13 weeks to December 27th, with a record number of customers shopping both in-store and online. This period, representing the third quarter of the company’s financial year, saw total sales reach £4.993 billion. This figure represents a significant year-on-year increase, largely attributable to the inclusion of the Ocado Retail operation within the reported figures.

Excluding the contribution from Ocado Retail, M&S still demonstrated positive growth, with sales rising 3.3% to £4.15 billion. However, performance was varied across different sectors. Specifically, the Fashion, Home & Beauty division experienced a 2.5% overall sales decline, amounting to £1.73 billion, with a like-for-like decrease of 2.9%.

The downturn in Fashion, Home & Beauty was attributed to a decline in store sales, impacted by reduced footfall on high streets. The company also cited the lingering effects of the earlier cyberattack on stock data and management as a contributing factor. Despite increasing stock levels for the December Sale compared to the previous year, sell-through rates remained strong, indicating continued customer demand.

Despite the overall decline, M&S highlighted positive developments within the UK fashion market. The company reported regaining market share leadership during the period and now holds the top position in customer perceptions of style, quality, and value. New season product lines are proving popular with consumers, and recently opened stores, such as the one in Bristol Cabot Circus, are exceeding performance expectations, validating the company’s store rotation strategy.

International sales showed a modest increase of 0.9%, reaching £158 million. This growth was driven by new wholesale agreements, increased online sales, and the performance of Food franchise operations, which offset challenges related to Fashion, Home & Beauty shipment phasing and performance in India.

CEO Stuart Machin expressed satisfaction with the results, noting that M&S was trusted by “millions more” to deliver for families during the Christmas period. He highlighted the strong performance of the Food division and its achievement of a new market share milestone. Regarding Fashion, Home & Beauty, Machin acknowledged the ongoing recovery efforts, emphasizing improved online performance and a successful Sale, paving the way for new season lines.

Looking ahead, Machin stated the company is entering the new calendar year with “full of ambition” and a focused plan to reshape M&S for sustained growth. He reiterated the commitment to delivering value, quality, and style in the Fashion division, noting the positive reception of new season ranges.