M&S shares drop on lower seasonal sales

Marks & Spencer sales hammered by pre-Christmas lockdowns

Marks & Spencer chief executive Steve Rowe said trading at the retailer was "robust" over the Christmas period, given the on-off restrictions and distortions in demand patterns due to Covid-19.

M&S's clothing and home sales plummeted 25.1% in its third quarter to December 26.

Covid-19 restrictions in the earlier 3 months saw Marks & Spencer choose a knock in revenue as the retailer experienced from the November lockdown and tiering limitations.

United Kingdom turnover for the three months to 26 December fell 7.6% on a like-for-like basis to £2.53 billion, as a 2.6% rise in food sales was more than offset by a 24.1% decline in clothing and home sales.

"More importantly, beneath the Covid clouds, we saw a very strong performance from the Food business including Ocado Retail and a further acceleration of Clothing & Home online", he added.

M&S warned on Friday that the tariff issue would have a significant impact on its business in Ireland, the Czech Republic and its franchise business in France.

"We appreciate that the rules of origin in the Trade and Co-operation Agreement were created to be facilitative on trade in goods, but we need a solution which genuinely reflects the needs of UK-EU supply and distribution chains for goods", said William Bain of the British Retail Consortium (BRC).

Any product that is manufactured in Europe, imported into the United Kingdom and then re-distributed to European Union countries faces a tariff.

At the company's Christmas trading update, chief executive Steve Rowe explained how the candies are a typical example of the problems facing retailers, as several report difficulties with new red tape.

"For big businesses there will be time consuming workarounds but for a lot of others this means paying tariffs or rebasing into the European Union".

"We appreciate that the rules of origin in the TCA were created to be facilitative on trade in goods, but we need a solution which genuinely reflects the needs of UK-EU supply and distribution chains for goods", said William Bain, trade policy adviser at the BRC.

With a high proportion of stores in the sort of city centre locations that have been hit hardest by the effect of the coronavirus pandemic, sales of £2.8bn were generated for the 13 weeks to December 26, 2020, were down 8.4% compared to the same period a year ago.

Marks & Spencer has reported a disappointing set of Christmas trading figures, despite some positivity from its Food division.

"This makes unravelling the genome sequence look simple", said M&S chairman Archie Norman, who fears the issue will damage overall United Kingdom competitiveness.

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