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M&S sees shares drop while Tesco sales boost City confidence
THE City punished Marks and Spencer following dismal Christmas clothing performance, while Tesco saw shares leap after announcing its best UK sales in three years.
The differing announcements saw M&S shares drop 4 per cent, with Tesco stock up three points.
Pressure on M &S boss Marc Bolland intensified after the market’s verdict of the retail chain’s disclosure last night (January 9) that like-for-like sales fell by 1.8 per cent in the UK in the 13 weeks to December 29, including a bigger-than-expected slump in general merchandise of 3.8 per cent.
Mr Bolland admitted that trading in non-food was not yet satisfactory but said the group had decided to protect margins by reducing promotions, and the turnaround plan needed time to take effect after his new management team were appointed.
The group produced a better-than-expected performance in its food business, where sales were up 0.3 per cent on a like-for-like basis, but City analysts warned time was running out for Mr Bolland to show signs of trading improvement in clothing.
Shore Capital analyst Clive Black said: "It is clear that pressure is rising on the new management with respect to the nature and performance of forthcoming spring and summer clothing ranges at M&S in the UK, and an improvement in relative and absolute terms is necessary for shareholders' confidence to be bolstered."
Outlook was much brighter for supermarket Tesco, which revealed its best UK sales growth in three years today as the chain's drive to reverse falling profits gathered pace over Christmas.
Like-for-like sales in the UK grew by 1.8 per cent in the six weeks to January 5 after a big improvement in food following last year's disastrous showing.
Chief executive Philip Clarke said the seasonal performance was encouraging but added there was "a lot more to do" as the market leader looks to recover from last year's first drop in profits for two decades.
Having taken over the running of the UK division last year, Mr Clarke announced today that Chris Bush, who has worked for the company for 30 years, is to join the Tesco board as UK managing director.
The news comes as up to 2,000 employees at camera equipment chain Jessops face redundancy after the firm went into administration yesterday, becoming the first high street casualty of 2013.