By Scott Wright

RETAIL giant Marks and Spencer rang up its best-ever Christmas food sales and declared that it was “more confident” about meeting its increased profit guidance of “at least £500 million”.

But the strong showing failed to impress the City, with investors sending shares in the high-street bellwether down by nearly eight per cent. Shares ended the day down 20p at 233p.

Chief executive Steve Rowe noted that the market “continues to be impacted by headwinds and tailwinds that we reported in the first half”, when it highlighted the effects of the pandemic, supply-chain bottlenecks and Brexit.

Retail prices are widely expected to rise this year with inflation expected to peak at 6% in April. Next warned last week that increased manufacturing and freight costs would force it to increase prices this year.

Food sales at M&S were 12.4 per cent higher at £1.9 billion in the 13 weeks to December 28 compared with the same period in 2019, before the pandemic struck, as the retailer highlighted that more shoppers were visiting M&S for their everyday shopping. And it reported a second successive quarter of clothing and home sales, which increased by 3.2% to £1.08bn on the back of “robust online and full price sales growth” against the comparable period two years previously. Group sales increased by 8.6% on the same comparison to £3.3bn.

Mr Rowe declared that he remains “encouraged that our transformation is was now driving improved performance”.

He said: “Trading over the Christmas period has been strong, demonstrating the continued improvements we’ve made to product and value. Clothing & Home has delivered growth for the second successive quarter, supported by robust online and full price sales growth. Food has maintained its momentum, outperforming the market over both 12 and 24 months.”

The M&S update came towards the end of a positive post-festive reporting period for the UK’s major food and drink retailers, which appear to have capitalised on the introduction of restrictions to combat the Omicron variant that decimated bookings in the hospitality trade.

Tesco and J Sainsbury have this week lifted full-year profit guidance following their performances in the run-up to Christmas, while Aldi said the festive season had been its “best ever”. Lidl said it welcomed a record number of festive shoppers.

Danni Hewson, a financial analyst at AJ Bell, said leaders at M&S will be “feeling really pleased that they’ve finally found the sparkle again and aren’t afraid to use it liberally”.

Ms Hewson said: “The brightest spot for the team must be the second successive quarter of growth in clothing and home.

“It’s an area the business has failed to make work for years, simply not understanding its consumer or placing more importance on winning new business than pleasing existing shoppers.”

She added: “Food has taken further leaps forward as the expansion of the available range has made everyday shopping more of an option.”

Tesco announced that it would keep on around 13,000 temporary Christmas staff to cope with Covid-related absences.

It came as the company reported that it now expects to full-year retail operating profit to come in at the top end of its previously issued £2.5bn to £2.6bn guidance, after reporting that like-for-like sales were 8.8% higher in the six weeks to January 8, compared with the same period two years ago.

Chief executive Ken Murphy said: “We are delighted that we were able to help our customers have a great Christmas. Despite growing cost pressures and supply chain challenges in the industry, we continued to invest to protect availability, doubled down on our commitment to deliver great value and offered our strongest ever festive range.

“This put us in a strong position to meet customers’ needs as, once again, Covid-19 led to a greater focus on celebrating at home.”

Shares in Tesco closed down 3.55p at 288.7p.

Separately, M&S announced yesterday that it has changed the name of a popular confectionery line from Midget Gems to Mini Gems to avoid offending people with dwarfism.

It follows a campaign by academic Dr Erin Pritchard, a lecturer in disability studies at Liverpool Hope University, who has achondroplasia, a condition which stunts growth.

Dr Pritchard had previously approached supermarkets and confectionery makers about changing the name of the sweet, raising her concerns that the use of the word “midget” is seen as derogatory for people with growth problems.