London pre-open: Stocks seen up; Marks & Spencer, B&M in focus

(Sharecast News) - London stocks were set to gain at the open on Thursday but the session was likely to be quieter than usual, with US markets closed for a national day of mourning for former president Jimmy Carter, who died in December. The FTSE 100 was called to open around 24 points higher, with retailers in focus amid updates from Marks & Spencer, B&M and Tesco.

Sticking with retail, data released earlier showed that shop prices continued to fall in December, driven by heavy discounting.

According to the latest BRC-NielsenIQ shop price index, deflation was 1.0%, compared to deflation of 0.6% in the previous month.

Within that, non-food deflation was -2.4%, its most since April 2021. Food inflation was 1.8%, unchanged on November but still the lowest rate since December 2021.

Helen Dickinson, chief executive of the British Retail Consortium, said: "Retailers discounted heavily for Black Friday, as they attempted to make up for weaker sales earlier in the year.

"However, the later Black Friday timing brought many of the non-food discounts into the measurement period, making non-food prices look more deflationary than the underlying trend."

Black Friday was on 29 November last year, compared to 24 November in 2023. Retailers tend to discount heavily in the build-up to the event and then maintain the cheaper prices into the following week.

Dickinson continued: "As retailers battle £7bn of increased costs in 2025, including higher employer NI, National Living Wage and new packaging levies, there is little hope of prices going anywhere but up."

Mike Watkins, head of retailer and business insight at NielsenIQ, said: "During December, shoppers benefited from both lower inflation than last year and bigger discounts, as both food and non-food retailers were keen to drive sales after a slow start to the quarter.

"However, higher household costs are unlikely to dissipate anytime soon so retailers will need to carefully manage any inflationary pressure in the months ahead."

In corporate news, food and clothing retailer Marks & Spencer posted a 6.4% rise in UK third-quarter like-for-like sales after a bumper Christmas period, and said it was still confident of making progress in the rest of the year despite a tough economic environment.

The company said sales came in at £3.9bn. Food revenue in the 13 weeks to 28 December increased 8.9% and 1.9% for home, clothing and beauty.

"As we enter the new year, the outlook for economic growth, inflation and interest rates is uncertain and the business faces higher costs from well-documented increases in taxation," said chief executive Stuart Machin.

"However there remain substantial opportunities and we are focused on what is within our control, as we reshape M&S for growth. Therefore, as indicated at the half year results in November, we are confident of making further progress in the remainder of the year."

Grocery giant Tesco reported a solid uptick in sales growth over the key Christmas trading period, as it posted its highest market share in eight years.

Sales across the UK and Republic of Ireland increased by 3.7% over the six weeks to 4 January, up from 2.8% growth over the third quarter ended 23 November, helped by growth at wholesale division Booker turning positive over Christmas. Operations in Central Europe also saw an acceleration of growth to 4.7% from 2.8%.

Discount retailer B&M reported third-quarter revenue growth of 2.8% year-on-year, driven by a strong seasonal performance in the UK and robust growth in France, although Heron Foods experienced a decline.

The FTSE 250 company flagged strong profit and cash generation in a trading update, as well as clean inventory levels and a continued positive start to January, alongside plans to open 73 new stores across its operations in the 2025 financial year.

A 15p per share, or £151m, special dividend was declared, with further capital returns to be considered after the ongoing redomicile process was finalised.