Marks & Spencer Stock Tumbles as Company Faces Higher Costs from Tax Increases

Marks & Spencer (LON: MKS) shares dropped more than 6% to 352.7p on Thursday despite reporting robust sales growth over the Christmas trading period. 

MKS shares are now trading around levels last seen in September 2024.

The retailer recorded a 5.6% rise in total group sales to £4.06 billion for the 13 weeks ending 28 December 2024, driven by strong performances in its Food division and modest growth in Clothing, Home & Beauty.

Food sales rose 8.7%, with like-for-like sales up 8.9%, as M&S maintained its position as the top-performing store-based grocery retailer during the period. 

The Clothing, Home & Beauty division saw a 1% rise in total sales, with online sales climbing 11.7%. However, international sales declined by 2.8% due to challenging market conditions in India and franchise shipment timing issues.

CEO Stuart Machin stated: “We sustained trading momentum with like-for-like sales up 8.9% for Food and 1.9% for Clothing, Home & Beauty. Sales records were broken across the business, with Food recording its biggest day and Clothing, Home & Beauty online its biggest week, but we're not complacent – as a growth business it's our job to break records.”

Despite the positive sales figures, the company's stock decline may reflect investor concerns over rising costs. 

M&S acknowledged the challenges posed by higher taxation and ongoing economic uncertainty, which could impact profitability moving forward. 

The challenges are not unique to Marks & Spencer, with various other retailers noting the headwinds following the UK budget announced in October. 

Nevertheless, MKS said it remains focused on controlling what it can, aiming to reshape its operations for future growth.“Transforming M&S is a marathon, not a sprint, and we go into 2025 shifting up a gear and raring to go as we accelerate the scale and pace of change,” the company concluded.