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M&S UK sales down due to non-food struggles

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High street retailer Marks & Spencer (M&S) saw its gross group sales grew 0.8 per cent during its fourth quarter, results released today reveal, but underlying UK trading was down year-on-year.

For the 13 weeks to March 31st 2012, UK like-for-like (LFL) sales decreased 0.7 per cent compared to the same period last year, as the retailer’s general merchandise offer struggled to tempt consumers.

Online sales performed strongly with trading up 22.8 per cent over the three months, whereas international sales dropped two per cent year-on-year.

M&S CEO Marc Bolland commented: “Marks & Spencer continued to make progress in a challenging market. Group sales grew by 0.8 per cent, and UK sales grew by 1.2 per cent.

“Our food business has again performed well, especially in healthy food, whilst the general merchandise performance was more mixed.

Overall food sales were up 3.1 per cent and grew one per cent LFL over the quarter but issues with stock and a withdrawal of technology goods from its offer meant general merchandise sales at M&S were down 2.8 per cent year-on-year.

In homewares sales slumped 7.5 per cent in total, while clothing sales dropped 0.3 per cent which was blamed on weak demand in womenswear and a lack of stock in a number of best-selling lines due to tight controls on replenishment.

Neil Saunders, Managing Director of retail analyst firm Conlumino, says that the retreat from electricals products made trading in homewares appear worse than it was but argues that M&S has some issues to address in its fashion offer.

“The decline in general merchandise sales is of some concern given the relatively weak comparatives in the same quarter of last year,” Saunders said.

“In clothing M&S serves a wide range of customers and in our view the offer needs to be executed with greater clarity and focus both to make it easier to shop and more enticing to consumers; this is especially true in womenswear.

“M&S has developed some credible sub-brands but now needs to leverage these to a greater extent. To M&S’s credit its new pilot stores address this point and it is encouraging that the concept is to be rolled out further.”

The roll-out of the pilot concept to the whole of the company’s store estate is still on track for completion by mid-2013 but the total cost is expected to be £100 million less then the original estimate of £600 million.

International sales were severely diminished by low consumer spending in debt ridden Greece & Ireland, but in emerging markets such as India & China the retailer recorded double digit sales growth over the quarter.

Bolland added: “We have continued to manage costs tightly, and are confident of delivering full year profits in line with expectations.

“While the short term trading outlook continues to be challenging, we are focused on investing in line with our plan and are making strong progress against our goal of becoming an international, multi-channel retailer.”

Published on Tuesday 17 April by Editorial Assistant

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