M&S To Reveal Christmas Clothing Sales Slump
Marks & Spencer experienced a worse-than-expected slump in pre-Christmas clothing sales, the company will announce on Thursday, underlining the scale of the recovery confronting Britain's best-known retailer.
I have learned that M&S's general merchandise sales in the 13 weeks to December 29 fell by approximately 3.7% on a like-for-like basis, against the same period last year, a measurement which strips out the effects of changes to selling space.
City sources said that M&S's food sales had fared better during the period, recording a like-for-like increase in the region of 0.3%.
The poor performance in clothing, however, which contrasts with that of Next and some other high street rivals during the crucial Christmas trading period, dragged M&S to an overall fall in like-for-like sales of just under 2%, according to these sources.
Marc Bolland, the M&S chief executive, will announce the numbers tomorrow morning in a trading statement covering the third quarter of M&S's financial year.
The news will place M&S firmly in the losers' camp of big UK retailers at a time when achieving significant sales increases without discounting has been rendered tougher by difficult economic conditions.
Today, J Sainsbury reported a 0.9% increase in third-quarter like-for-like sales, its 32nd consecutive quarter of growth. That followed Wm Morrison's disappointing figures earlier this week. Along with M&S, Tesco reports on its Christmas trading performance tomorrow.
City analysts' forecasts for performance in M&S's like-for-like general merchandise sales ranged from an increase of 0.5% to a decline of 3.5%, with a consensus among 11 analysts of a 1.5% fall.
The fact that the true picture is uglier than even the worst City expectations will heap pressure on Mr Bolland, who took over as chief executive in 2010.
M&S's former head of clothing, Kate Bostock, left to join the internet retailer Asos last year after months of speculation linking her with a move. Her successor, style director Belinda Earl, a former boss of Debenhams, has only recently joined and Mr Bolland has warned that the effects of her influence will not be felt until the autumn.
In food, forecasts ranged from a fall of 0.8% in like-for-like sales to a 1.5% increase, with a consensus of a 0.5% rise.
Shares in M&S have slipped almost 10% in the last month amid growing concern in the market about the group's likely Christmas trading performance.
While like-for-like figures are one measure of retailers' performance, they ignore the impact on profitability of price reductions designed to drive higher sales volumes.
Some rivals, including Debenhams, which reported a record festive sales performance earlier this week, discounted heavily before Christmas in order to lure shoppers.
Analysts at Nomura, which predicted a fall of 1.4% in overall like-for-like sales, said last week that it expected December sales "to struggle against tough prior-year promotion-driven comparatives to make positive ground, despite some reports of strong retail sales in the week before Christmas".
M&S refused to comment.