Financial News

  • 10 January 2014, 13:42

M&S Christmas Clothing Sales Fall 2.1%

Extended pre-Christmas discounting by Marks & Spencer has failed to spark sales growth in the company's troubled clothing lines.

M&S confirmed to the City that it had suffered its tenth consecutive quarter of falling sales in its general merchandise division, which also includes gifts and homeware, dropping 2.1% on a like-for-like basis in the eight weeks to December 24.

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% on clothing lines - would hit profit margins when full-year results are reported later this year.

Total UK sales fell by 0.2% over the same period on a like-for-like basis - with its popular food offering propping up its performance with growth of 1.6%.

In the quarter ending December 28, total sales rose by 1.5%.

Chief executive Marc Bolland said: "We delivered an improved performance in General Merchandise over the important Christmas period, with sales up 1.5% in a highly promotional market.

"However, an exceptionally unseasonal October, which saw General Merchandise sales down strongly, has resulted in a quarterly performance below our expectations."

He has insisted its approach to revamping its clothing offering is working but taking time - with womenswear showing particular improvement so far.

Nevertheless, the sales slump was worse than expected and poorer than the previous quarter's performance, when M&S posted a 1.3% decline in UK like-for-like sales.

Mr Bolland, who insists that major shareholders understand the step-by-step nature of his reforms to boost trade, began a reshuffle of the brand's key fashion executives more than a year ago.

The launch of its Autumn collection heralded the start of its new approach to clothing.

M&S said its food saw record sales over the Christmas period, with the biggest day coming on December 23 when 64m was spent by customers.

Mr Bolland said growth in online sales of 23% was "strongly ahead of the market".

The company's share price fell 1.7% in the first few minutes of trading when the FTSE 100 opened for business but later recovered - up by more than 3% in mid-morning trade.

The reversal followed comments by the M&S chief financial officer, Alan Stewart, who told reporters that the executive team, led by Mr Bolland, retained the backing of the board and investors despite the performance in clothing.

In a conference call with journalists he said: "The board is behind us and behind the strategy and the shareholders are behind us and behind the strategy."

He declined to put a time frame on when M&S would return to positive like-for-like sales growth in general merchandise.

"The step by step approach is what we've spoken about and I think that's the way in which we're going to be measured and the way that we look at it," he said.

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