[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Tuesday, 10 January 2006, 18:13 GMT
M&S welcomes 'strong Christmas'
Shoppers queue outside Marks and Spencer's Canterbury store over Christmas
Shoppers queued early in the morning for M&S's holiday sale
Marks and Spencer has said it enjoyed a "particularly strong" Christmas, driven by buoyant sales of food and drink.

The retailer said it was encouraged by its overall performance, which saw like-for-like sales rise 2.9% in the 13 weeks to the end of December.

Food sales rose nearly 8% over the period while clothes sales grew 1.9%.

Industry experts say retailers enjoyed their best Christmas since 2001 but that holiday sales fizzled out after a strong start.

'No discounting'

M&S saw overall sales grow 4.8% during the third quarter - but within its overall performance is a marked divergence between different product categories.

While food sales accelerated strongly, sales of general merchandise rose more slowly, gaining 2.1%.

I am very pleased with this set of results but we have a lot more work to do
Stuart Rose, M&S chief executive

However, full price sales of general merchandise were up by more than 5%, compared with just 0.4% last year.

Many retailers were forced to offer big discounts to boost business in the run-up to Christmas, with some offering up to 20% off goods.

But chief executive Stuart Rose said that M&S had not offered any discounts over the period.

"Overall we have repositioned our prices and concentrated on giving our customers value. In terms of discounting, (there was) absolutely no discounting at all."

Although its performance was driven by food, Mr Rose said that other areas of the business were also recovering.

"I am very pleased with this set of results but we have a lot more work to do," he added.

'Challenging market'

Progress had been made in improving stock buying and management, Mr Rose added, with far fewer goods being included in the holiday sales.

However, he warned that market conditions were still "challenging", with costs from fuel, rent and business rates rising sharply.

Marks & Spencer coffee cake (Credit: Marks & Spencer)
Food sales were the primary reason for the strong performance

Analysts said the retailer's performance was in line with expectations, reflecting the fact that it did not discount on clothing before Christmas.

Richard Ratner, head of research at Seymour Pierce, said that excluding food, many retailers had only boosted sales through heavy discounting.

He also expressed caution about general retail prospects for 2006.

"We think life will now become very difficult," he told the BBC.

"2006 could end up being worse or, indeed at best, as bad as 2005."

Marks & Spencer's shares finished the day down by 1.9%, or 9.5p, at 492.5p.




BBC NEWS: VIDEO AND AUDIO
M&S chief executive Stuart Rose defends the figures



RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific