Marks and Spencer shares had another lift in early trade before retreating, as the retailer saw double digit sales growth over the key Christmas period. Their core shoppers are far more insulated from the cost-of-living crisis, helping them put the best foot forward in festive sales.
According to Researcher NIQ, M&S's food sales, on a value basis, rose 12.1% in the 12 weeks to the end of December. They attracted more shoppers to their stores in December, grabbing a bigger slice of the market. Almost 29% of households bought from M&S in December, up from 27% in the same period last year. There may be concern that hanging onto this new custom will be challenging as budgets are tightened in the months to come.
B&M booms
At the other end of the scale, stores that screamed value at shoppers proved the big draw this Christmas, with B&M European Value Retail releasing a sturdy set of numbers, enabling it to keep its full year profit guidance intact. It expected full year adjusted profit of £620-630 million up from the £573 million pounds it made in 2022/23.
However, sales growth did temper from 6.2% in the first half, and investors are clearly disappointed, with shares falling in early trade. While bargain hunting is a big driver for grocery items and other essentials, it appears that shoppers may be showing less appetite for goods they would like to have but don’t necessarily need. Nevertheless, the resilient results have given the company confidence to keep ploughing on with its store expansion programme, with 45 new UK shops set to be opened over the next two years.
Games Workshop puts up a good fight
Games Workshop has put in a good fight amid the Christmas competition. The Warhammer owner revealed that revenue rose 11% in the 26 weeks to November 26 and festive sales were in line with expectations. It shows the benefit of being a big player in a niche industry, with fantasy fans seemingly undeterred by cost-of-living headwinds. The business may also be benefitting from a desire to staying in and find entertainment at home, rather than spending on nights out.
However, the company has flagged challenging economic times, so there will be some concern sales may droop and investors appear cautious, with shares falling in early trade.
Further ahead its tie-up with Amazon Prime will bring the world of Warhammer to the small screen, which has the potential to propel sales and give the brand a boost like Mattel saw with Barbie toy sales after the blockbuster hit. With screenwriters currently being hired to bring life to the Warhammer universe, Games Workshop’s fantasy worlds look set to reach a much wider audience of consumers.
Savvy shopping stays strong
With savvy shopping becoming a big trend, it’s not surprising that the British Retail Consortium has flagged a challenging year ahead for retailers. Consumers are ringfencing budgets for holidays and are buying less stuff. The potential for attacks in the Red Sea to delay shipments has again been flagged, which could prove another cost headache for retailers.
As budgets are squeezed and the threat of recession hovers, the lipstick effect is taking hold, with shoppers still keen to find little treats for themselves or as presents, despite the tough economic climate. Demand for beauty products and personal care items boosted sales, as clothing and jewellery proved less popular.
About the author: Susannah Streeter is head of money and markets at Hargreaves Lansdown.
