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Ian Pollard – Marks Trounced By Tesco

Marks & Spencer MKS Brave words from Steve Rowe as he tries to explain away Marks continued decline both at home and abroad. Group third quarter sales for  the thirteen weeks  to the 30th December fell by 0.1%. In the UK total sales fell by 1.4% with clothing and home down by 2.8% which should not surprise anyone when clothing prices are high and uncompetitive.The decline at home however falls into insignificance compared to the mayhem abroad where international sales collapsed by 9.8%. Rowe describes it as a mixed quarter which  must go down as the understatement of the year so far. The international debacle is explained away as being “planned” leaving Marks open to the question as to why they did not plan for international expansion, instead. Nevertheless in the year ahead   Marks claims it will be getting its business back on track as its accelerated transformation continues. Brave words indeed, albeit  based on this Christmas, somewhat empty sounding.What Marks can not explain away is that it is operating in the same market with the same market conditions as Tesco which has had a highly successful Xmas and third quarter.

Tesco plc TSCO  A third quarter rise of 2.3% in like for like sales only exposed the glaring weaknesses in Marks performance. Tesco enjoyed a record Xmas and outperformed the market in sales and volume. UK food sales in the 4 weeks to Christmas Day rose by 3.4% but this was somewhat offset by weakness in general merchandise.. The only other weakness was in Asia where like for like sales fell by 11.1% over 19 weeks as Tesco withdrew from bulk selling in Thailand. As for the coming year the merger with Booker is now expected to complete in March.

Barratt Developments BDEV Gone are the days of heady growth for the UKs largest housebuilder whose forward sales as at the end of December showed a rise of only 2% and whose growth for 2018 is expected to be only modest. Nonetheless the first half performance is described as being strong, supported naturally by the government and by good mortgage availability. Total completions in the 6 months to the 31st December rose but only by 144 units on top of the previous total of 7.180 units. Where Barratts really won was on its average selling price which it managed to increase by 6.5% more than double that of its competitors who have reported recently. and way above the increase in average building costs during the period.

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