M&S and Tesco Warn of Rising Costs

Leading UK retailers Tesco and Marks & Spencer (M&S) have issued stark warnings about rising costs and tax increases impacting their businesses in 2025, despite reporting strong Christmas trading. M&S achieved £4.06 billion in sales for the three months ending December 28, a 5.6% increase, while Tesco noted its biggest-ever Christmas. However, both companies are grappling with significant tax hikes from the recent Budget, with M&S facing a £60 million annual cost and Tesco an additional £250 million in National Insurance contributions, which has led to a cautious outlook for the future. Share prices for both retailers fell sharply, reflecting investor concerns over inflation and economic uncertainty, despite M&S's food sales rising nearly 9% during the festive period. Tesco CEO Ken Murphy emphasized their commitment to minimizing price increases for consumers, while M&S CEO Stuart Machin echoed similar sentiments, suggesting that they would strive to hold prices as stable as possible amid rising costs. Overall, the retail sector is bracing for further inflation, with grocery price inflation already escalating to 3.7% in December.