M&S shares under pressure after festive sales disappointment
MARKS & Spencer saw shares slump after it revealed another steep fall in clothes sales and disappointing festive trading in its food halls as it failed to lure in cost-conscious shoppers.
The high street bellwether blamed a mild October for a 2.8% fall in likefor-like clothing and home sales over the 13 weeks to December 30, while it said “ongoing under-performance” in its food arm left sales 0.4% lower.
Shares tumbled nearly 7% amid wider falls in the retail sector after sales growth at supermarket giant Tesco missed City expectations.
M&S said a pick-up in trading over the key Christmas weeks helped offset a difficult start to the quarter, with consumer spending under pressure amid a squeeze on budgets from inflation.
The sales falls were not as bad as feared, although this failed to allay concerns in the City.
Chief executive Steve Rowe sought to assure that the clothing arm was still turning around and would have seen sales rise in the Christmas quarter had it not been for the unusually warm October.
But he admitted the group had “a lot to do to get our business back on track” having disappointed with its food performance once more despite rivals enjoying a sales boost from rising inflation.
M&S slashed prices on 200 lines before Christmas, but Mr Rowe said the group had not been competitive enough on everyday lines. While premium sales fared well, it suffered on sales of produce such as Brussels sprouts as consumers on “tighter budgets” defected to rivals.
M&S said it held off from slashing prices despite intense competition and saw sales grow both in store and online in the weeks leading up to Christmas.
It also shunned the Black Friday discount frenzy in November, but said the tough October left overall sales lower while it was also left with more stock to shift in the postChristmas sales.
Overall, its third quarter like-forlike sales were 1.4% lower.
Online sales at M&S.com lifted 3%, while its ongoing move to pull out of international markets saw overseas sales slump 9.8%.
Sales at the John Lewis Partnership grew over Christmas but the group warned profits will be dragged down by attempts to maintain competitive against its rivals.
The department store saw like-forlike sales grow 3.1% in the six weeks to December 30, while its sister company Waitrose booked a comparable sales rise of 1.5%.
But chairman Sir Charlie Mayfield said that the John Lewis commitment to being “never knowingly undersold” – the chain’s price matching promise – alongside soaring costs linked to the Brexit-hit pound, will dent full-year profits.
Sir Charlie said he expects trading to be “volatile” this year due to the economic environment and structural changes taking place in the retail industry.
In better news, John Lewis said Black Friday week was the busiest in its history and included a record hour for online trade.
At Waitrose, the firm said it created a “real festive buzz” as it launched 500 new products, such as Heston Citrus Sherbert Lazy Gin, which sold