Dip in sales for Marks & Spencer


Published: Tuesday 7th July 2015 by The News Editor

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High street giant Marks & Spencer posted a drop in quarterly clothing sales, after a colder May impacted demand for its spring and summer collections.

The retailer said its general merchandise like-for-like sales fell 0.4% in the 13 weeks to June 27, compared to a 1.5% fall a year ago, as it went thorough a “challenging and promotional quarter.” The group’s general merchandise unit is made up largely of its clothing sales.

But the retailer’s fall was much less than the 1% slide the market was expecting, although the slip in general merchandise reverses a solitary quarter of growth in this part of the business after 14 quarters of decline.

The group’s food like-for-like sales lifted 0.3% during the period, compared to a 1.7% rise a year ago, with the retailer describing the unit as delivering “another excellent quarter”.

The retailer, which launched 700 new food lines during the period, continues to see its high-end items outperform the grocery market, which is locked in a supermarket price war.

The group also said it will launch a £150 million share buyback programme for investors, which is due to begin on July 8.

The move will cheer shareholders gathered at the group’s annual meeting in at Wembley Stadium in London today.

Chief executive Marc Bolland said: “We continue to make progress against our key priorities. Our food business did very well in a difficult market. In general merchandise, sales were broadly level on last year and we are on track to deliver the planned increase in gross margin.”

In May Marks & Spencer turned a corner by posting its first annual profits increase in four years.

The firm reported underlying profits for the year to March 28 rose 6.1% to £661.2 million, beating City expectations, and easing some of the intense pressure Mr Bolland has been under in recent years.

Mr Bolland took over at M&S in 2010 and during his tenure he saw rival Next overtake the annual profits haul at his business.

Under his leadership, Marks has poured billions of pounds of investment into the business to try to turn around its fortunes, while clearing out its top fashion team, and recruiting celebrities for high-profile marketing campaigns.

Yet sales at the beleaguered general merchandise division continued to crumble – with 14 quarters in a row of like-for-like declines until a 0.7% lift in the previous quarter.

Items such as a much-talked about 1970s-style suede skirt worn by TV presenter and model Alexa Chung have helped improve the image of Marks’s clothing range.

Although the group has delivered another fall in general merchandise sales in this quarter, it is less than half the slide brokers had feared.

Also, its food sales continue to grow in one of the most difficult grocery markets in decades.

It said it was on track to open around 90 Simply Food stores this year.

The group suffered delays before Christmas after the relaunch of its online service M&S.com, but it said the operation has made good progress since then.

It said online sales jumped 38.7% during the period. The retailer said: “M&S.com sales were very strong, albeit against a soft post-launch comparative.”

Richard Hunter, head of equities at Hargreaves Lansdown, said: “Whilst the statement contains little to shoot the lights out, it seems that there may be signs of some positive momentum now being established.”

He added: “However, the elephant in the changing room remains, in the form of general merchandise. Whether M&S can ever return to former glories by enticing clothes shoppers back to its stores is arguably its largest challenge, even though the more recent experience implies at least a stabilisation of previously dropping numbers.”

Published: Tuesday 7th July 2015 by The News Editor

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