Promotions boost M&S and Debenhams

Debenhams and M&S have reported modest sales increases over the festive period, as discounting helped entice shoppers.

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Clothing sales increased 1.1% over the 13 weeks to 31 December while food sales increased 4.5%. Homeware sales fell 13.3% during the period, but M&S attributes this to exiting the technology market earlier in the year and expects the roll out of its expanded home range to boost performance.

M&S’s online business reported a 22.4% rise in sales.

The retailer’s moderate rise in sales was boosted by food sales as customers prepared for Christmas celebrations, but M&S is preparing to cut costs in the first half of the year to offset the effect of promotional activity on margins.

Debenhams, meanwhile, reported a 6.5% like-for-like sales increase in December as heavy promotional activity attracted customers. In the 18 weeks to 7 January Debenhams reported a 1.5% increase in like-for-like sales and a 0.5% rise in total sales. Online sales were 34.8% up for the period.

At the same time, the British Retail Consortium (BRC) has reported that like-for-like sales values across the sector were 2.2% higher in December than in 2010, when sales were heavily impacted by snow. Total sales in the month were up 4.1% against a 1.5% increase in the previous year, the best performance since January 2011.

Food sales picked up as expected, but were often promotion-lead.

Non-food non-store sales, which include online, phone and catalogue sales were up 18.5% on the pervious year.

Stephen Robertson, director general of the BRC says Christmas trading was “better than hoped for” but doesn’t signal an ongoing uptick.

He adds: “A solid December result hasn’t rescued a pretty miserable year. Whole-year figures show minimal growth in 2011. For many customers, economic reality has bitten again since the New Year and, with consumer confidence returning to levels last seen during the recession, 2012 is expected to be an equally challenging year.”

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