Key facts
- Marks & Spencer shares fell over 6% due to concerns about rising inflation and taxes.
- The retailer reported strong Christmas sales, with food sales up 8.9%.
- M&S warned of an uncertain economic outlook, higher costs from taxes like National Insurance, and potential price rises.
- The British Retail Consortium forecasts food price inflation to rise significantly in the latter half of the year.
- Tesco reported a 4.1% rise in UK sales for the six weeks to January 4.
- Greggs reported a 2.5% rise in sales for the three months to December 28, missing expectations.
Marks & Spencer shares declined as investors grew concerned about the impact of rising inflation and increased taxes on consumer spending, despite the retailer reporting robust Christmas trading figures. The company warned of an uncertain economic outlook, higher costs from taxes such as National Insurance, and the potential need to pass these onto consumers.
Over the key Christmas period, M&S saw an 8.9% increase in comparable food sales and a 1.9% growth in home and beauty sales. Overall sales for the 13 weeks ending December 28 rose by 5.6%. However, the company's share price fell by more than 6% following its cautious outlook on the UK economy.
The British Retail Consortium (BRC) lobby group cautioned that Budget measures would likely lead to further increases in food prices, forecasting a rise in food price inflation from 1.8% to 4.2% in the latter half of the year. Retailers have warned that higher wages and taxes, including an increase in the National Living Wage and employers' National Insurance contributions, could lead to job cuts, price rises, and shop closures.
Competitors also reported mixed results and outlooks. Tesco confirmed that increased National Insurance contributions would add £250 million annually to its costs and reported a 4.1% rise in UK sales for the six weeks to January 4. Greggs, however, saw its sales increase by only 2.5% in the three months to December 28, missing expectations and causing its share price to tumble by 11.2%. Discount retailer B&M also reported a 2.8% fall in like-for-like UK sales for the same period.