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Food glory food: M&S, Tesco lift outlook, ASOS fashion chain in decline

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LONDON – UK shoppers’ desire to celebrate Christmas at home has propelled Tesco and Marks & Spencer to the top of festive retailing, with demand for premium food, wine and champagne both helping to improve forecasts of profits.

The rapid spread of the Omicron coronavirus variant in the weeks leading up to Christmas has left many pubs and restaurants deserted, with shoppers instead turning to supermarket aisles to entertain smaller groups at home.

While the country’s largest supermarket, Tesco, sold more than 8 million bottles of champagne and sparkling wine, pub group Mitchells & Butlers said sales fell 10.2% in the four weeks. Christmas versus pre-pandemic trade.

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There was also pressure on the fast fashion front, with the former stock market darling ASOS stating that its sales, although in line with downward expectations, had been limited by volatility in demand and the constraints of the supply chain.

Tesco boss Ken Murphy said the group has invested more to secure delivery at a time when labor shortages caused by Omicron and higher transportation costs have affected deliveries.

“It has put us in a strong position to meet customer needs as, once again, COVID-19 has led to a greater focus on celebrating at home,” he said.

M&S, Britain’s most famous store group recovering from a decade of decline, said food sales rose 12.4% from their pre-pandemic performance. two years ago in the 13 weeks leading up to Jan. 1, while clothing and home sales rose 3.2%. Both were better than expected.

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MORE DIFFICULT TIMES TO COME

British clothing retailer Next set the tone for the holiday reporting season by releasing its results last week, showing consumer demand has been much stronger than expected.

Since then, supermarkets, sportswear groups and furniture vendors have reported strong Christmas sales, but they almost all warn that 2022 will be tough as UK consumers are set to be crushed by rising costs of the energy, taxes and general inflation.

Next and ASOS have warned that they have introduced price increases to counter cost inflation due to increases in wages, freight and manufacturing. German discount supermarkets Aldi and Lidl have said they will continue to keep prices low, keeping pressure on the industry.

Official economic surveys show that consumer spending held up well until the end of December, but even though some Britons kept money while working from home, they are expected to curb spending in 2022 as the cost of life increases.

Shares of Tesco and M&S both fell early in the session as they were supposed to improve forecasts. ASOS shares rose 6% after announcing its intention to move to the main stock exchange listing, thereby expanding its possible shareholder base. (Report by Kate Holton edited by Keith Weir)