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By James Davey and Paul Sandle
LONDON, Jan 13 (Reuters) - A desire by British shoppers to
celebrate Christmas at home spurred Tesco and Marks &
Spencer to the top of the festive retail pile, with
demand for premium food, wine and champagne helping both to
upgrade profit forecasts.
The rapid spread of the Omicron coronavirus variant in the
weeks running up to Christmas left many pubs and restaurants
deserted, as shoppers turned instead to the supermarket aisles
to entertain smaller groups at home.
While the country's biggest supermarket Tesco sold more than
8 million bottles of champagne and sparkling wine, pubs group
Mitchells & Butlers said their sales fell 10.2% in the
four weeks over Christmas compared with pre-pandemic trading.
There was also pressure on the fast-fashion front, with
one-time stock market darling ASOS reporting that its
sales, while in line with downgraded forecasts, had been limited
by demand volatility and supply chain constraints.
Tesco boss Ken Murphy said the group had invested more to
guarantee delivery at a time when Omicron-sparked labour
shortages and higher freight costs have hit deliveries.
"This put us in a strong position to meet customers' needs
as, once again, COVID-19 led to a greater focus on celebrating
at home," he said.
M&S, Britain's most famous stores group which is recovering
from a decade of decline, said food sales increased 12.4%
against its pre-pandemic performance two years ago in the 13
weeks to Jan. 1, while clothing and home sales rose 3.2%. Both
were better than expected.
TOUGHER TIMES AHEAD
British clothing retailer Next set the tone for the
festive reporting season when it published results last week
showing that consumer demand had been much stronger than
expected.
Since then supermarkets, sportswear groups and furniture
sellers have reported strong Christmas sales, however they
nearly all caution that 2022 will be tough when British
consumers are expected to be clobbered by a rise in energy
costs, taxes and general inflation.
Next and ASOS warned that they had introduced some price
rises to counter surging cost inflation from wage rises, freight
and manufacturing. German discount supermarkets Aldi and Lidl
have said they will continue to maintain the lowest prices,
keeping the pressure up on the sector.
Official economic surveys show that consumer spending held
up well to the end of December, but even though some Britons
conserved cash while working from home, they are expected to
rein in spending in 2022 as the cost of living jumps.
Shares in Tesco and M&S both slipped in early trading, as
they had been expected to upgrade forecasts. Shares in ASOS were
up 6% after it said it would move to the main stock market
listing, broadening its possible shareholder base.
(Reporting by Kate Holton
Editing by Keith Weir)
