The boss of Marks & Spencer has warned of passing on increased costs to customers through price rises, as the retail giant’s sales surged over the Christmas period
Marks & Spencer’s chief, Stuart Machin, has sounded the alarm on potential price hikes for shoppers as the retail giant enjoyed a bumper sales period over Christmas.
On Thursday, Machin expressed his reluctance to pass on “as little as possible” of the increased costs to customers but admitted that the firm had to “rework” its strategy for the upcoming years in light of unexpected fiscal changes.
He pointed out that they “didn’t plan” for Chancellor Rachel Reeves’s move to hike national insurance contributions (NICs) in the Budget. Despite the challenges, he assured that any price inflation “will be small and it will be behind the market” though he conceded that keeping costs down is “not easy”.
The company’s shares took a hit, dropping by up to 8% on Thursday morning, although they later recouped some losses, sitting around 6% lower by mid-morning. The increase in NICs, part of a series of tax rises announced in October aimed at funding public services improvements like the NHS, has faced backlash from various businesses.
M&S had previously warned that the tax rise, along with an increased minimum wage, could cost the firm £120m. Machin on Thursday highlighted: “Our suppliers are also feeling the pinch, and that comes through straight to retail.”
He concluded by saying that the company plans to counterbalance the rising expenses by seeking supply chain savings and striving for greater business efficiency.
When quizzed about potential job cuts at M&S following the Budget, the boss admitted: “This is going to be a challenge for us.”
He remained optimistic, however, saying: “I do not see in M&S big job losses. We’re a growing business. We’ve got lots to do.”
But he conceded that the company must be “really diligent” about where it hires new staff. “Does it make us look at how we recruit? Of course it does, and that does mean we have to think about where we invest,” he explained.
This comes on the heels of a festive sales boom for M&S, with its food division leading the charge and recording its largest ever trading day. The retailer raked in £4.06bn in sales over the three months to December 28, marking a 5.6% increase from the previous year.
Food sales alone jumped by 8.7% year-on-year, accounting for nearly two-thirds of the total sales. In contrast, there was a modest 1% growth in its clothing, home, and beauty departments.
Since taking the helm in 2022, Mr Machin has been steering a business revival, investing in larger food stores to capitalise on the brand’s most lucrative sector. Yet, the clothing division also celebrated its highest-ever online weekly sales, signalling a significant turnaround from its previously unfashionable image.
Mr Machin stated: “Sales records were broken across the business, with food recording its biggest day and clothing, home and beauty online its biggest week, but we’re not complacent – as a growth business it’s our job to break records.”
“The external environment remains challenging, with cost and economic headwinds to navigate, but there is much within our control.”
