M&S wins in the high street war

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The Independent Online
Marks & Spencer, Britain's largest retailer, emerged yesterday as one of the winners of Christmas in the high street. Burton, dogged by too many weak brand names and mistakes made in its core menswear division, disclosed that it had been one of t he worst.

The divergence was shown as the two issued starkly contrasting trading statements demonstrating that the retail recovery remains a patchy affair from which only the most efficient operators are benefiting.

M&S, headed by Sir Richard Greenbury, turned in good figures boosted by a particularly strong Christmas. Burton, which includes the Debenhams, Top Shop and Dorothy Perkins stores, had a tougher time and scarcely managed any growth.

The two sets of figures bring an end to the flurry of trading statements issued by the big retailers since Christmas. One still to come is Etam, which is expected to issue a statement over the next few days. Some analysts are expecting a poor performanceand an indication of lower profits.

Like many other retail groups, M&S saw sluggish trading in October and November followed by a surge in the run-up to Christmas.

Like-for-like sales in the 20 weeks to 31 December rose by 6.7 per cent, with sales in December rising by a feisty 10.8 per cent on the year before. Margins remained at the previous year's levels, with minimal price inflation. This contrasted with comments made earlier this week by David Sainsbury, chairman of the J Sainsbury's supermarket group, who said the company was experiencing inflationary pressures.

Brooks Brothers, the upmarket US retailer, remains a problem for M&S. It traded poorly, although the company declined to comment further. Julie Ramshaw, retail analyst at Morgan Stanley, said the group was a victim of lacklustre apparel growth in Americaand the absence of a chief executive since last year. "They need a strong appointment there," Ms Ramshaw said.

Burton would probably love to have M&S's problems. Debenhams continues to be the star in Burton's firmament but the good work there is being dissipated by weak trading at the fashion businesses such as the Burton and Principles stores, which both lost money last year. However, analysts were encouraged by an improvement in gross margin of 3.7 per cent.

Morgan Stanley's Ms Ramshaw said: "The management is holding its resolve and Burton is not just a mark-down masochist any more. The business is committed to moving away from mark-downs. They've got to make sure that their first price is the right price."

Burton's chairman, Sir John Hoskyns, said sales in the 20 weeks to 21 January rose by just 0.1 per cent. Debenhams enjoyed sales up 4.4 per cent but sales at the multiples such as Dorothy Perkins, Top Shop and Top Man slumped by 4.2 per cent.