M&S reports strong festive sales but says UK firms will take hit from tax rises

London: Marks & Spencer had a pretty good Christmas this year. They saw strong sales in their food department, which is great news. But there’s a catch. The company is warning that UK businesses will face higher costs because of tax increases coming from the government.

Sales in their established food halls jumped by 8.9%, making them the top grocer during the festive season, according to Kantar. Clothing and home goods also saw a slight increase of 1.9% in sales over the 13 weeks leading up to December 28.

They even broke records, having their biggest food trading day ever on December 23. M&S added 500 new products to their food range, and categories like meat, fresh fruits, and baked goods saw impressive growth. Partywear and denim sales were also up compared to last year.

Stuart Machin, the CEO, mentioned that while it was a good Christmas, they’re not getting too comfortable. He pointed out that the economic landscape is still tricky. With rising inflation and interest rates, the outlook isn’t exactly rosy.

The £40 billion in tax hikes announced in the October budget will hit businesses hard, especially with national insurance costs and minimum wage increases coming in April. Retailers are worried they might have to lay off thousands of workers this year, as sales growth during the crucial Christmas period was nearly stagnant.

The British Retail Consortium estimates that retailers will face a £7 billion increase in costs by 2025, leading many to raise prices. Food prices are expected to rise by 4.2% in the latter half of the year, while non-food items will likely follow inflation trends.

In other news, Greggs, the UK’s largest bakery chain, reported a sales increase of 11.3% last year, reaching over £2 billion. They opened a record number of shops and saw strong sales for their festive offerings. However, foot traffic has slowed down recently.

Looking ahead, Greggs’ CEO noted that rising employment costs will contribute to overall cost inflation, but wage increases might help consumers a bit.