M&S sales slide again as it shuns price promotions

● Clothing and homewares sales down 2.8%, food off 0.4% during festive period

& Spencer yesterday reported a fresh fall in clothing sales in its Christmas trading quarter as the retailer declined to join a frenzy of high street price promotions.

Steve Rowe, group chief executive, acknowledged the performance was “mixed” as an unseasonally warm October hit overall sales and left more stock to shift in the postfestive sales.

M&S’S like-for-like sales in clothing and homewares fell 2.8 per cent in the 13 weeks to 30 December, while revenues at its food division dipped 0.4 per cent. Shares closed down 7 per cent at 301.2p.

Overseas sales slumped 9.8 per cent as the group continues to exit some foreign markets, although rose 6.5 per cent in the markets it intends to remain in. Online sales at M&s.com lifted 3 per cent.

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. As a result, full year [profits] guidance remains unchanged.”

Revenues rose both in-store and online over the weeks leading up to Christmas, with Rowe adding that the company “held our price stance in a very promotional market and did not participate in Black Friday”.

Laith Khalaf, senior analyst at broker Hargreaves Lansdown, commented: “This is a disappointing set of figures for M&S, particularly in its food and online businesses. Sales in clothing and home actually fell by the biggest margin, but in a market which is shrinking, that’s more a reflection of wider economic trends.

“In recent years the food business has been the bright light of the M&S empire, but its glow has definitely dimmed of late. That’s probably a result of consumers tightening their belts when it comes to grocery shopping, and the strong permarks formance of supermarket premium ranges suggests when customers are splashing out, they are increasingly doing it at Sainsbury’s, Tesco and Morrisons rather than at M&S.”

Rowe said that on food, the group had “a lot to do to get our business back on track” having disappointed in the last few quarters.

M&S reset its strategy in November two months after retail guru and former Asda boss Archie Norman became chairman. The company said then that it would speed up closure of lossmaking outlets and downsizings, while repositioning its food offer, including slowing down openings of Simply Food stores.

In addition, it said that it would run a more streamlined foreign operation. M&S also announced earlier this week that it would outsource more than half of its 430 IT roles under a technology overhaul that will save £30 million a year. The City consensus forecast for full-year underlying profits at the company is £578m, down from £614m made in 2016-17 – which would be a second consecutive year of decline.

Department store chain House of Fraser became the latest retailer to reveal festive trading woes as it saw store sales slump 2.9 per cent in the run up to Christmas.

Theembattledgroup–which revealed it was asking landlords to cut some of its rents last week – said the sales fall over the crucial six weeks to 23 December came as it held off from heavy discounting outside of Black Friday.

Online sales tumbled 7.5 per cent as it continued to come under pressure after the recent launch of a new web platform.

But chairman Frank Slevin insisted it was a “credible performance” in a difficult retail market.

Close rival Debenhams warned over profits last week after tough trading, while figures also out on Thursday from Marks & Spencer showed a steep fall in clothing and home sales, although it blamed this on an unusually warm October.

House of Fraser said Black Friday was more successful for the chain, with sales over the promotional event in November up 0.8 per cent in stores and within 1 per cent of last year’s record performance online.

It added that trading since 23 December has been mixed following “disappointing” sales in the week after Christmas, although it has halted sales declines in store and online since New Year’s Day.

Alex Williamson, chief executive of House of Fraser, said: “We are a business in transition; our focus is on driving profitability rather than chasing revenue at any cost.

“We are not a business determined to sell everything to everyone at any price.”

He said turnaround efforts were continuing “at pace” and added its online offering was now “back on track” after recent disruption.

Last Friday it emerged that the company behind one of Scotland’s most iconic department stores asked the landlords of some of its outlets for rent reductions, as retailers battle challenging conditions.

House of Fraser, which owns Jenners in Edinburgh, has confirmed it has contacted the owners of a number of its stores to ask for “support”. The retailer, which has six stores in Scotland – in Edinburgh, Glasgow, Inverness and Dumbarton – was last month described by ratings agency Moody’s as “a very high credit risk” after it experienced disappointing results in the first three quarters of the financial year.

Speculation arose about the state of the company’s finances after the House of Fraser site at the west end of Edinburgh’s Princes Street was put up for sale.