Consumer confidence has stabilised at a low level but will fall further this year, Marks & Spencer chief executive Marc Bolland warned this week, as the company issued a robust fourth-quarter update.
Bolland said that, unlike some rivals, sales hadn’t slumped during March, but said the consumer environment would become more difficult. “In February and March consumer confidence has been low but stable,” he said. “We’ve not come off a cliff in March and we’ve not seen a big impact after the Budget. But we believe for the next year the customer will be in an even more difficult position. There will be less discretionary spend.”
M&S’s group sales rose 2.3% in the 13 weeks to 2 April, with UK like-for-likes up 0.1%, comprising a 3.9% decline in general merchandise and a 3.4% increase in food. On an underlying basis – taking into account the timing of the Christmas sale last year – the total like-for-like increase was 2.2% with a rise of 0.7% in non-food sales.
Bolland said he was happy with the performance, as it was up against strong comparatives and M&S gained market share in the period in food and non-food. He said trading had been strong around Valentine’s Day and Mother’s Day.
The average price of products had gone up by 6%, but Bolland said this was largely down to the VAT rise and customers trading up. Inflation contributed about 1.5% to the rise, and finance director Alan Stewart said he was looking at sourcing and range architecture to minimise its impact on shoppers.