Marks & Spencer revealed on Thursday better than expected Christmas sales, however the retail giant has cautioned there could be stock delays and price increases due to the events in the Red Sea.
The Iranian back Houthis militant group based in Yemen have been attacking commercial vessels in the Red Sea using drones which has impacted the Suez Canal shipping route.
Many global companies have as a result of the Houthis using “attack drones” on commercial vessels which has led to shipping diverting thousands of miles around the Cape of Good Hope.
The diversions could push costs up on the home and clothing business and affect the “availability” of new items.
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Chief executive Stuart Machin said, “We’re conscious of the cost and availability of new ranges.”
He warned that the Red Sea disruption is “impacting everyone and something we’re very focused on.”
He added, “Our plan is not to increase prices in clothing and home – yes, there may be some cost increases to us from the Red Sea issue, but it’s a bit too early to call that out yet.”
Shares in the group eased back by 5% on Thursday as Marks & Spencer’s added the note of caution over the outlook in the coming weeks and months.
M&S said, “As we enter the new year and 2024/25, expectations for economic growth remain uncertain, with consumer and geopolitical risks.
“We also face additional cost increases from higher-than-anticipated wage and business rates-related cost inflation.
“Nevertheless, the strong Christmas trading performance provides confidence that the results for the year will be consistent with market expectations.”
On Wednesday Simon Roberts, chief executive of Sainsbury’s revealed that he has held “regular calls” with Downing Street over potential disruptions for shipping in the Red Sea.
Roberts said that shipments of general merchandise and wine are facing delayed journeys as shipping containers are now going around the Cape of Good Hope making the travel time up to two weeks longer.
Roberts said, “Through the last three or four weeks our team have spent time working out how to get the impact to an absolute minimum.
“The vast majority of container ships are instead going around the Cape of Good Hope which is making journeys 10 to 14 days longer.
“We are working on our sequencing of orders to ensure we always have good availability in product areas which can travel through these routes, such as general merchandise and wine.
“Getting products from across the world is an important issue for the Government, so we are on regular calls to make sure we have the latest intel and understand the potential impacts.”