Festive trading season turns sour for M&S

LAST week saw Marks & Spencer release a disappointing third quarter trading update, which included numbers for the important Christmas period.

Total sales were flat on last year, at £3.2billion. However, this was supported by the addition of new Simply Food shops. Sales in existing food outlets fell 0.4 per cent.

Like-for-like sales also fell in the clothing & home business, down 2.8 per cent. M&S says this was hit by an unseasonably warm October, which would have hampered sales of coats.

However, with falling sales a longstanding feature in this part of the business, investors are unlikely to attribute all of the blame to unpredictable British weather. Since taking up the post in 2016, CEO Steve Rowe has set out to “make M&S special again”. His words might be a bit clichéd these days, but they do encapsulate the challenge of breathing new life into a business that’s fallen flat after years of magic and sparkle.

Stage one of the turnaround was to step away from underperforming stores, both in the UK and overseas. Next on the list is rationalising the cost base and improving the group’s performance online.

This all sounds sensible. However, M&S’ online sales grew just 3 per cent in the most recent quarter, a far cry from the 16 per cent growth in total online sales. So, plenty of work to be done.

Unfortunately, the food business is also suffering. Recent updates have warned of heightened competition, and it’s easy to guess where from. Ocado’s premium online shopping service continues to hoover up customers and, on the same day as M&S’s results, John Lewis confirmed sales in the average Waitrose store were up 2.2 per cent.

These difficulties have caused M&S to scale back its roll-out plans. The emphasis will now be on improving the stores it already has, rather than opening up reams of new space.

With both divisions in decline, the outlook looks pretty bleak.

Nonetheless, if Mr Rowe can rouse this sleeping giant, the rewards could be vast. The problem is, there’s little sign M&S is about to stir from its slumber.

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