M&S suffers clothing sales slump

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Marks & Spencer suffered a tenth successive quarterly like-for-like sales decline in its beleaguered homewares and clothing division today as they slumped by 2.1 per cent.

A 0.5 per cent improvement in the eight weeks to Christmas Eve was not enough to save the beleaguered retailer from the deteriorating overall performance for general merchandise (GM).

The group admitted that a series of discounts to drive seasonal sales - which included a pre-Christmas “Mega Day” with reductions of up to 30 per cent on clothing lines - would hit profit margins when full-year results are reported later this year.

Chief executive Marc Bolland welcomed the improved Christmas performance with sales up in a “highly promotional market”.

“However, an exceptionally unseasonal October, which saw GM sales down strongly, has resulted in a quarterly performance below our expectations,” he added.

The sales slump was worse than expected and poorer than the previous quarter, when M&S posted a 1.3 per cent decline.

Mr Bolland is likely to face renewed pressure over the performance, coming more than a year after he began a reshuffle of the brand’s key fashion executives as the store tried to turn around its fortunes.

Food sales continued to grow, with record sales over the Christmas period and a biggest day ever of sales when £64m of M&S groceries went through the check-outs on December 23.

But the like-for-like improvement of 1.6 per cent over the quarter compared with 3.2 per cent last time meant even this performance showed a slowdown.

Mr Bolland said growth in online sales of 23 per cent was “strongly ahead of the market”.

Rival retailer New Look posted a 1.5 per cent rise in like-for-like UK sales over the seven weeks to December 28, putting Marks’s 0.5 per cent improvement over a similar period in the shade. Its web sales were up 62 per cent.

It admitted that it had also suffered a difficult start to the quarter due to an unseasonably warm October, though the company did not post figures covering the whole of the period.

But chief executive Anders Kristiansen indicated that despite extensive discounting across the high street, its strong full price sales performance had protected profit margins - striking a contrast with the hit suffered by its larger rival.

M&S said: “This has been a challenging quarter for the general merchandise market, with unseasonal conditions and higher than ever levels of discounting.

“Against this backdrop, we held our full price trading stance for much of the quarter, but as the level of promotional activity in the marketplace intensified in the run-up to Christmas, we responded with a number of promotions.”

Margins in the GM division are expected to be down up to 0.5% for the year, resulting in the overall margin being flat on the previous 12-month period.

The company said there were “early signs in improvement” in womenswear amid a focus on quality and style, with small market share growth for the first time in three years, and a good performance in coats, dresses and footwear.

Meanwhile, the group boasted that one in four families had enjoyed an M&S turkey on Christmas Day.

Looking ahead, it said the spring/summer collection had been well received, but warned that it remained cautious about the outlook given continued pressures on disposable incomes.