- Marks & Spencer leads in Christmas sales
- Controversial ad boosts profits
- Morrisons and Asda struggle
According to data indicating the revitalised retailer had the highest-performing grocery store, Marks & Spencer emerged victorious in the competition for customer loyalty in the food aisles during the lead-up to Christmas.
Since Chief Executive Stuart Machin and Chairman Archie Norman spearheaded a recovery that has more than doubled the company’s share price over the past year, M&S has been on a roll. This achievement propelled the company back into the FTSE 100 index of prominent companies, from which it had been absent for four years.
The merchandise retailer’s Christmas advertisement showcased prominent figures, including pop vocalist Sophie Ellis-Bextor and actress Hannah Waddingham, generated considerable controversy when they were observed deconstructing several customary holiday objects, such as a gingerbread house and paper crowns.
Unpublished Kantar data obtained by The Mail on Sunday and analyzed by a prominent City investment firm indicate, however, that the controversial campaign has been profitable.
This indicates that during the critical four weeks leading up to Christmas Eve, Marks & Spencer experienced a 14.2% increase in grocery sales compared to the prior year’s corresponding period.
This surpassed the combined expansion of the discounters Aldi and Lidl, both owned by German entities, by a marginal margin of 14.1%.
In aggregate, consumers spent an unprecedented £13.7 billion on Christmas provisions. Kantar stated that this caused the average household’s expenditures to reach a record high of £477.
Additional victors included Sainsbury’s, which experienced a 9.5% increase in sales, and budget retailer B&M, which witnessed a 7.4% growth during the corresponding time frame. According to the data, they were the only retailers to surpass the sector-wide average market growth of 7.1 per cent as Christmas approached.
Challenges and Prospects of M&S-Ocado Venture
Ocado received the lowest performance, with sales increasing by a meagre 0.5 per cent. M&S and the online retailer are partners in a collaborative venture.
The Chairman of M&S, Archie Norman, has expressed dissatisfaction with the performance of the joint venture and stated that “work remains” to be done to better the partnership’s loss-making nature. The 2019 agreement, which could be worth up to £750 million, superseded an earlier partnership between Waitrose and Ocado. Before the holiday season, M&S reportedly added around 600 products to the Ocado website.
M&S and Ocado are anticipating that investor updates on the joint venture in the coming days will contain additional information regarding its progress.
According to analysts at the investment bank Jefferies, M&S’s results will “reflect its renewed strength.”
In the three months leading up to December, the company anticipates that its largest business, Food, will drive double-digit percentage sales growth. As a result, M&S is on course to earn £705 million in annual profits, up from £482 million the year prior.
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Both companies were indebted to private equity firms that had acquired them just before the surge in energy prices and interest rates significantly impacted the grocery industry.
Morrisons, acquired by buyout firm CD&R for £7 billion, experienced a marginal increase of 2.1 per cent in sales during the preceding Christmas. Although performing better, Asda’s revenues increased by 5.1% but remained below the overall market. Its private equity owner, TDR Capital, is scheduled to testify before members of parliament on Tuesday regarding the debt-fueled acquisition that left Asda with outstanding obligations of £4.2 billion (rent excluded).
Mohsin Issa, co-owner of Asda, asserted last month before the Business and Trade Select Committee that he was the most qualified candidate to lead the company during the ongoing 18-month search for a CEO.
