M&S still work in progress amid latest lacklustre trading

Comment Martin Flanagan

Marks & Spencer’s latest trading quarter through Christmas was a mixed bag. The numbers suggested that the minimal dip of 0.1 per cent in the group’s Q2 clothing and home division sales last November was a false dawn. It has been followed by a 2.8 per cent fall in like-for-like sales in the latest period. In addition, there was continuing under-performance in M&S’S food division, with sales off 0.4 per cent. Food, while still not suffering the woes of clothing, has ceased to be M&S’S get-outof-jail card for nearly a year now.

Meanwhile, a mere 3 per cent lift in sales at M&s.com is far from industry-leading given the new internet dynamic on the high street.

Of less concern is the 9.8 per cent fall in overseas sales. Chief executive Steve Rowe has clearly signalled an acceleration of plans to pull out of many overseas markets to focus on the day job in the UK – the group is no longer about flag-planting.

There were positives. M&S kept its nerve on pricing, largely eschewing the high street festive promotion frenzy and not participating in Black Friday (even if that is vaguely irreligious among many retailers these days).

Trading improved in the weeks leading up to Christmas, with revenues growing both in-store and online.

And City M&S followers said there was also relief the sales declines were not worse given recent profit warnings from the likes of Debenhams, Mothercare and Moss Bros.

However, this latest update will do nothing to change perceptions that restoring the key clothing business and regaining momentum in food is likely to be a lengthy job. Under-performing stores are already being closed, while the opening of new M&S Simply Food outlets has been slowed down. Although still highly profitable due to its Middle Britain customer demographic, not for the first time since the 1990s halcyon days M&S has the overriding look of a work in progress.