M&S and Primark in festive fashion flop - but cautious shoppers splash out on food and drink
Marks & Spencer and Primark fell out of fashion over Christmas as British shoppers shunned clothes and gifts, and prioritised food and drink.In updates that shone a light on the strain felt by the High Street, a host of big names warned of weak consumer confidence and a reluctance to splash out.The sentiment was echoed by a report today showing fewer people visited shops this Christmas.Shore Capital analyst Clive Black said: ‘The Rachel Reeves 2025 Budget was a motorway pile-up for the UK consumer economy, on the back of a car crash of a matching event in 2024. Will they ever learn?’M&S blamed a 2.9 per cent slump in fashion and homeware sales over the 13 weeks to December 27 on fewer shoppers – even as strong food sales lifted it to a ‘record’ Christmas.It said trading was ‘marked by fragile consumer confidence and milder weather’. Fashion victim: M&S blamed a 2.9% slump in fashion and homeware sales over the 13 weeks to December 27 on ‘reduced’ shopper numbersSales were also dragged down by the aftermath of a cyber attack last Easter, which left it unable to sell clothes online for nearly two months and sent shoppers flocking towards rivals.M&S boss Stuart Machin insisted the division was ‘getting back on track’. Festive food, including its best-seller gingerbread and white chocolate cookies, and party food such as mini chicken kyivs and tiger prawns, helped food sales rise 5.6 per cent.Its shares rose 5 per cent, or 16.3p, to 344.8p. But it was a gloomier tale for Primark, which issued a profit warning after a ‘challenging consumer environment’ at home and abroad.Sales in Europe – nearly half of group revenues – fell 5.7 per cent in the 16 weeks to January 3, while sales in the UK grew just 1.7 per cent.This sent shares in owner Associated British Foods down 14 per cent.And the boss of Tesco said that many shoppers are ‘really counting every penny’ as food prices climb.Britain’s largest supermarket’s sales rose 3.2 per cent in the six weeks to January 3 as customers splashed out on its premium label products.But that was less than investors had hoped, and the shares fell 6.7 per cent, or 30.5p, to 422.1p.Chief executive Ken Murphy said: ‘Value continues to be a key priority as customers seek to make their money go further and we’re determined to do everything we can to help.‘You are seeing consumers whose households are in pretty good shape and then seeing a lot of people that are really counting every penny.’ He described competition as ‘relentless’ after Tesco hit its highest market share in over a decade. Elsewhere, chief executive of Greggs, Roisin Currie, said consumers were ‘saving rather than spending’.The updates chime with data from Worldpanel this week, which showed supermarkets raked in a record £500million a day in the run-up to Christmas.But this came at the expense of shops selling clothes, electronics and homeware.Retail’s golden quarter, which should be its most lucrative time of the year, was marked by uncertainty over what would be in the Budget in November.The gloom continued into December as shopper numbers fell 2.9 per cent compared to a year earlier. Consumers held back on purchases ahead of January sales, according to the British Retail Consortium. Slump clouds ABF spin-off plan The slump in the Associated British Foods (ABF) share price has cast a shadow over plans to list its Primark fashion arm as an independent business.More than £2billion was wiped off the value of the FTSE 100 group – which owns food brands including Ryvita and Twinings as well as the high street chain – after it warned that bleak Christmas trading will hit profits.The grim update and yesterday’s 14 per cent share price fall raise questions over what value Primark will fetch if it is spun off and listed on the stock market as its own entity this year, as planned.Retail expert Nick Bubb said the group ‘will have to lower its sights on the business valuations’.Primark sales in continental Europe, which make up nearly half of revenues, fell 5.7 per cent in the 16 weeks to January 3 while sales in the UK grew just 1.7 per cent.The group now expects that its profits will be lower than last year. ABF paved the way for a break-up of the £13billion empire after launching a review of its business last year.The conglomerate is set to announce in April whether its Primark retail arm will be spun out and, if so, where it will be listed – London or New York.Dan Coatsworth, head of markets at AJ Bell, said: ‘Primark has been going through a difficult patch which is not the ideal backdrop for a de-merger from ABF as it could dampen the potential valuation.’ DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. 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M&S and Primark in festive fashion flop - but cautious shoppers splash out on food and drink
