M&S under pressure as festive sales decline
MARKS & Spencer was the worst performer on the FTSE 100 yesterday after reporting a fall in both clothing and food sales over the crucial festive period.
In a week which has seen mixed fortunes across the high street as retailers announce Christmas trading performances, Marks & Spencer saw total UK like-for-like sales fall 1.4 per cent in the 13 weeks to December 30.
Not even the appearance of Paddington Bear in the retailer’s Christmas advertising campaign could keep on track chief executive Steve Rowe’s turnaround plan. M&S finished the day down seven per cent, or 22.8p, at 301.2p.
Mr Rowe said yesterday that the group was “making further changes to get the business back on track”.
But analysts were largely unforgiving, with Neil Wilson, senior market analysts, at ETX Capital saying the chief executive’s plan could be questioned.
“As expected Marks and Spencer suffered a bad fall in sales over the Christmas quarter – badly lagging competitors on all fronts – and as such there could be serious question marks over Steve Rowe’s turnaround strategy,” he said.
In November, the 134 year-old business appointed retail veteran Archie Norman as chairman and said it was accelerating store closures and slowing down the opening of Simply Food stores.
But its much-maligned clothing and home division fell by 2.8 per cent on a like-for-like basis, to £1.2 billion while food sales fell by 1.4 per cent to £1.7bn.
Describing the period, which generated a total £3.2bn in sales, Mr Rowe said: “M&S had a mixed quarter with better Christmas trading in both businesses going some way to offset a weak clothing market in October and ongoing underperformance in our food like-for-like sales.”
While a better performance than analysts had forecast, Mr Rowe put the decline in food sales down to “ongoing trading pressures”, noting consumer spending “reflected tighter budgets”.
“Price investment before Christ- mas and a strong performance from seasonal lines helped late trading,” he said.
Mr Rowe added that in clothing and home the group continued its strategy of restoring price integrity and improving everyday value.
“Our revenue grew both in-store and online over the weeks leading up to Christmas, and we held our full price stance in a very promotional market and did not participate in Black Friday,” he said. “However, the impact of an unseasonal October resulted in an overall revenue decline.”
This led to more stock being carried into the December sale.
Marks & Spencer has 97 stores in Scotland. Of these, 24 are full stores, six are outlets and 67 are Simply Food stores, 33 of which are owned by the company and 34 franchised. Online sales at the group grew by three per cent, a fall from the six per cent growth recorded the previous quarter.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Online sales growth at M&S looks prett y feeble when compared to the wider market. Steve Rowe’s target of pushing digital sales at M&S to one-third of