Glorious food: M&S, Tesco elevator prospects, ASOS downbeat fashion chain

LONDON, Jan 13 (Reuters) – British shoppers’ desire to celebrate Christmas at home has pushed Tesco (TSCO.L) and Marks & Spencer (MKS.L) to the top of the festive retail pile, with demand of high-end food and wine products and champagne both helping to improve earnings forecasts.

The rapid spread of the Omicron variant of the coronavirus in the weeks leading up to Christmas has left many pubs and restaurants deserted, with shoppers instead turning to supermarket aisles to entertain smaller groups at home. Read more

While the country’s biggest supermarket, Tesco, sold more than 8 million bottles of champagne and sparkling wine, pub group Mitchells & Butlers (MAB.L) said sales fell 10.2% over the four weeks of Christmas compared to pre-pandemic trading.

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There was also pressure on the fast fashion front, with former stock market darling ASOS (ASOS.L) reporting that its sales, while in line with the downgraded forecast, had been limited by the volatility of demand and supply chain constraints.

Tesco boss Ken Murphy said the group had invested more to secure delivery at a time when labor shortages caused by Omicron and rising transport costs have hit deliveries. Read more

“This has put us in a strong position to meet customer needs as, once again, COVID-19 has led to a greater emphasis on celebrating at home,” he said.

M&S, Britain’s most famous retail group recovering from a decade of decline, said food sales were up 12.4% on their pre-pandemic performance there turned two in the 13 weeks to Jan. 1, while clothing and home sales rose 3.2%. Both were better than expected. Read more

HARDER TIMES AHEAD

British clothing retailer Next (NXT.L) set the tone for the festive reporting season when it released results last week showing consumer demand had been much stronger than expected. Read more

Since then, supermarkets, sportswear groups and furniture sellers have reported strong Christmas sales, but almost all warn that 2022 will be difficult when UK consumers are expected to be burdened by rising energy costs , taxes and general inflation.

Next and ASOS have warned they have introduced price hikes to counter soaring cost inflation due to rising wages, freight and manufacturing. German discount supermarkets Aldi and Lidl said they would continue to keep prices low, keeping pressure on the sector. Read more

Official economic surveys show consumer spending held up well until the end of December, but while some Britons saved money by working from home, they are expected to rein in spending in 2022 as the cost of life climbs.

Shares of Tesco and M&S both fell in early trading as they were expected to improve forecasts. Shares of ASOS rose 6% after announcing it would move to the main stock market listing, broadening its possible shareholder base.

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Reporting by Kate Holton Editing by Keith Weir

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