Yorkshire Times
Weekend Edition
5:01 AM 9th January 2021

Market Analysis: M&S And Greggs Trading Results

This week Marks & Spencer issued a 3rd Quarter trading update and Newcastle-based Greggs 4th Quarter trading results.

Ross Hindle
Ross Hindle
Ross Hindle, retail sector analyst at Third Bridge, commented “Marks & Spencer saw positive growth in food sales of 2.6%. However the growth is not enough to is offset their fashion-division declines with total sales for the Group down 8.4% for the quarter."

"M&S's potential acquisition of Jaeger hints at the potential for a more aggressive shift into the multi-brand space. M&S have numerous large stores which could be filled with non-M&S merchandise in order to drive their top-line. The risk here is whether such brands might cannibalise M&S branded products."

"Despite the pressure faced by their clothing division, the M&S food division is expected to deliver solid results, propelled by both stock-piling and its Ocado partnership. Ocado has outperformed throughout the pandemic gaining 20 basis points in market share, however capacity issues continue to limit the Group’s growth potential."

"Part of M&S's recovery is dependent on an effective vaccine rollout and a return to the business-as-usual some say may come from Autumn onwards. However long-term success will be dependent on the company fixing the structural problems it faces around a bloated product range, high SKU count, and high street store portfolio."

"The UK's third national lockdown poses some unprecedented challenges to the fashion division at M&S, which was already struggling pre-covid."

On the results from Greggs, Ross Hindle told the Yorkshire & Lancashire Times that:

“Greggs has taken a battering over the last year but so has everyone in the food-to-go sector. However, relative its peers and expectations, they've cooked up a good Q4 trading performance with like-for-like sales averaging 81.1% of the 2019 level. This was driven by a local town store footprint, keeping stores open during the second lockdown, drive-through capabilities, plus a big push into delivery and collect.”

“Greggs has moved successfully into online sales since March and whilst these only account for a small proportion of total group sales, online penetration is expected to reach double-digits over the next 24 months.”

“Greggs’ investment into its supply chain has allowed the group to respond quickly to the challenges of the pandemic with sensitive product range changes. Also, strong supply chain control has improved cash flow and given the group flexibility for future growth.”

“Greggs’ value-targeted product offerings and local town store locations put it in a good position for continued growth and success in 2021. Who doesn't fancy a veggie sausage whilst they work from home? The big question for Greggs remains around the group's ability to shift its consumer perception away from a purely value proposition and into one where they can charge a price reflective of its improved quality and product offering.”