M&S chief warns of 'tougher' year ahead

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The Independent Online

Marks & Spencer today warned of tough times ahead for shoppers in 2010 despite the retailer's first like-for-like sales growth in more than two years.



M&S grew sales by 0.8 per cent in the 13 weeks to December 26, although it said trading from the first day of its sales would have added a further 1 per cent to this figure.



The high street bellwether also took record takings of more than £50 million on December 23 but executive chairman Sir Stuart Rose was in cautious mood amid lingering economic uncertainty.



He said the consumer climate was likely to "get tougher" this year as the day of reckoning for the UK's dire public finances draws closer.



"We know that we have got some medicine coming ... There is the prospect, whoever is in power in the mid-part of this year, of some really stringent measures coming in to bring down the deficit," Sir Stuart added.



His comments echoed those of rivals John Lewis and Next, which saw better-than-expected Christmas trading but warned of pressure on consumers.



M&S was trading against far easier comparisons than in 2008, when it registered a 7.1 per cent fall in same-store sales at the height of the recession - its worst performance since 1999.



But today's growth continues the run of improving sales trends seen since then despite a difficult year for the business.



M&S saw general merchandise sales grow 1.2 per cent as the group refused to cut prices in the run-up to Christmas in contrast with last year's two one-day specials to tempt in hard-pressed shoppers.



The retailer said clothing sales rose 4 per cent - helped by more than eight million jumpers and cardigans flying off the shelves.



A pink duffle coat worn by model Twiggy in the retailer's pre-Christmas advertisements sold out within three weeks, a spokewoman added, while the company also sold half a million Autograph lingerie sets.



Food sales were 0.4 per cent ahead of a year earlier as shoppers bought more than 36 million mince pies and a million bottles of champagne, the retailer added.



Sir Stuart praised his staff for battling through the pre-Christmas snow although the latest outbreak of winter weather caused 56 stores to close early yesterday. Just two stores are closed today, at Reigate in Surrey and Ebbw Vale in South Wales.



Despite the impact of the retailer's traditional Boxing Day closure on this year's trading figures, he said the firm had no plans to open on Boxing Day next year.



The retail boss is handing over the reins to Morrisons chief executive Marc Bolland - credited with turning around the supermarket - but added that there was no firm start date for the new boss as yet.



Seymour Pierce analyst Kate Heseltine said the M&S trading update was "broadly in line with expectation" although shares fell 5 per cent as markets digested the firm's cautious view over next year.



City experts added that tough pre-Christmas competition was also likely to have squeezed margins in the firm's food business.



"In our view, the share price is likely to continue to reflect the hope of change with Mr Bolland's appointment, although on fundamentals, it looks expensive," Investec analyst Katharine Wynne said.

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