Marks and Spencer says Brexit “significantly impacts” its European business amid highly complex red tape

Marks and Spencer today said the Brexit trade deal was set to “significantly impact” its EU stores’ sales as highly complex paperwork throws delays into its system.

In a trading statement today marked by a predictable plunge in sales from its locked-down stores but a surge in online takings, M&S acknowledged the trade deal struck on Christmas Eve would mean no tariffs for goods coming into its UK stores. But it warned of “very complex administrative processes” for stores abroad.

It cited its businesses in the EU states of Ireland, the Czech Republic and France as being vulnerable.

The FTSE 250 chain is among firms that imports a number of goods to the UK, before then sending them on to its stores in the bloc, with goods such as Percy Pigs made in Germany.

That means it is potentially exposed to higher costs and much more paperwork at borders, under the new free trade agreement between the UK and the EU.

International revenues already fell 10.4% due to changing Covid-19 restrictions in the 13 weeks to 26 December.

M&S had earlier this week blamed Brexit for its franchised French stores running out of salads and sandwiches. 

Elsewhere, M&S put in a creditable Christmas performance given the pandemic’s inevitable hit to its bricks and mortar stores as food sales saved the day.

Its online tie-up with Ocado, struck before the crisis, looked ever more prescient. Even though its High Street food sales were hit by fewer people visiting town centres, it managed a 2.6% increase in like-for-like grocery takings.

Total UK like-for-like sales were down 7.6% with clothing and homewares collapsing a predictable 24.1%.

Fashion and home had accelerated online as sales from shops plunged 46.5% against online sales rises of 47.5%, albeit the latter came from a far lower base.

Chief executive Steve Rowe said: "Given the on-off restrictions and distortions in demand patterns our trading was robust over the Christmas period.

“More importantly, beneath the Covid clouds we saw a very strong performance from the food business including Ocado Retail and a further acceleration of clothing and home online.”