Sales wear thin at troubled M&S

Associate City Editor THE spring warmth expected from Marks & Spencer’s trading update turned to an icy blast as the High Street bellwether posted ‘dire’ results.

In the first three months of the year, underlying UK sales dropped 0.7pc – short of City expectations.

Stock shortages meant it ran out of women’s jumpers in February, only shifting a third of the winter warmers it could have done.

Sales of clothing and home goods dropped 2.8pc in the three months, in a set of results branded ‘dire’ by analysts.

In the previous three months, non-food sales dropped by 1.8pc. But trading slumped further after a supply chain foul-up left the retailer with bare cupboards – because its women’s jumpers are knitted in the Far East and take up to six weeks to arrive in the UK.

‘We sold 100,000 items on knitwear and we could have sold potentially about 300,000 items,’ admitted chief executive Marc Bolland.

Food sales had been expected to redeem the results, and the group anticipated a sales increase of up to 2pc.

But sales only grew by 1pc in the three months.

Bolland blamed supermarkets that enticed customers through their doors by offering petrol coupons when they shop. A slide in demand for technology also hurt the group’s home ware section, with technology accounting for 90pc of the group’s 9pc fall in home sales, while internet sales rose 22.8pc.

Shares dropped 3pc after the group missed its targets, but said it would still post full year profits in the region of £690m.

The results ‘don’t make for very good reading,’ said Capital Spreads’ chief executive Simon Denham, who added: ‘Today’s numbers come as rather a shock.

‘For a stock that has until this morning appreciated some 20pc so far this year, some investors will be nursing a bit of a loss after their dire numbers.’

The stock finished the day 9p lower at 358.7p, ending the run that has seen the shares gain 15pc since the start of 2012.

When he joined the group in May 2010, Bolland was handed a welcome package approaching £15m to help turn the group around.

But despite the handsome remuneration, the share price remains below the £4 level that was offered for the group in 2004 by retail tycoon Sir Philip Green.

The market value of the group has since fallen behind fashion chain Burberry.

While M&S is worth £5.75bn, Burberry’s value is now £6.59bn.

More at thisismoney.co.uk/mks