Marks & Spencer reports sharp fall in sales
Marks & Spencer has announced another sharp fall in sales today, but insisted it was in a better position than a year ago.
M&S said like-for-like sales dropped by 5.4% during the 14 weeks to July 9 – a worse performance than the whole of the previous year, when the decline was 5.1%.
Problems were greatest in general merchandise – including clothing and homewares – which fell a combined 11.2% on a same-store basis. This was faster than the 9.2% decline in the previous quarter.
But the retailer said its food sales were improving, and grew by 0.7% in the period, as it recovered from a like-for-like drop of 3.1% in the final quarter of its last financial year.
M&S stuck by its targets for cost savings and margins this year and reported an improving trend in selling clothes and homewares at full prices over the past three quarters.
It has delayed its clearance sale by 18 days, until tomorrow, and said it now had 40% less stock in stores than a year ago.
Chief executive Stuart Rose said the trading environment continued to be “very tough” but it was hopeful of making further progress because of better deals with suppliers, and stock and cost control.
The trading update was issued ahead of its annual meeting in Birmingham today, and comes a year after M&S fended off a £9.1bn (€13.2bn) takeover proposal from Bhs owner Philip Green.
Mr Rose said good progress has been made over the past year and customers were responding positively to price cuts, citing substantial volume growth.
Analysts say M&S is being squeezed by discount retailers and smaller rivals that deal in “fast fashion” and can respond to changes in fashion trends swiftly.
Mr Rose said the figures, showing a faster decline in sales of general merchandise, reflected “the significant change in our trading stance compared to this time last year” when the aim was to shift a glut of stock.
He said: “This was achieved through deeper mark-downs and extended sale periods. This boosted sales figures but impacted profitability.
“Our focus remains full price profitable sales, improving our financial performance through margin, cost and mark-down management.”
M&S said its recent advertising campaign had swayed shoppers into looking again into its food offering, while new products and availability had also helped.
