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M&S UK LFLs up 0.6% as food drives growth

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High street retailer Marks and Spencer (M&S) has reported a UK like-for-like (LFL) sales rise of 0.6 per cent in its fourth quarter thanks to a rise in food sales, which helped boost performance as disappointing sales of general merchandise (GM) continued.

In the 13 weeks ended March 30th 2013, total UK sales grew 2.6 per cent as food sales increased 6.3 per cent on a total basis and four per cent LFL.

However, the retailer’s floundering GM division failed to deliver, with total sales falling 2.2 per cent and LFLs seeing a 3.8 per cent decline over the period as increased promotions from competitors in March forced the retailer to introduce “selected tactical offers.”

“We are working hard on improving our performance in General Merchandise and, despite difficult trading conditions, we made progress in our operational execution,” said M&S CEO Marc Bolland.

“We delivered an excellent result in Food, with performance well ahead of the market, as customers continued to trust us for provenance and quality.”

M&S has been unaffected by the ongoing horsemeat scandal which has embroiled competitors and noted that it has now delivered three consecutive years of LFL sales growth in its food category.

Robin Knight, Partner at restructuring firm Zolfo Cooper, explained: “Food sales are the white knight for M&S, painting a much brighter picture than its clothing sales.

“With food becoming an increasing focus for the whole business, and an international expansion of its food division on the cards, the grocery department is certainly out-performing its rivals.

But M&S’s clothing sales continue to disappoint. The retailer is increasingly under pressure to revamp the quality and style of its clothes and it is clear that M&S needs to develop the brand to reconnect with its diverse and highly fragmented target audience.”

The retailer’s click & collect offer ‘Shop Your Way’ has helped boost online sales, which jumped 22.9 per cent over the quarter as the initiative drove increased traffic to its website.

Mobile sales soared by over 70 per cent on a year earlier, buoyed by a recent upgrade to M&S’ mobile app and, as multichannel continues to drive growth, the retailer is set to open its new e-commerce distribution centre later this month while its new web platform will launch next Spring.

Internationally, the business “continues to perform well”, with franchises in the Middle East reporting a strong performance while its key markets in India and China also traded well.

European sales improved in the quarter despite economic problems and M&S said in a statement that it remains cautious about the year ahead given the current climate.

“In January we said we expect the pressure on consumers’ disposable incomes to continue throughout 2013,” the statement said.

“As a result we were cautious about the outlook for the year ahead and this view remains unchanged.

“We continue to make good progress in transforming Marks and Spencer from a traditional UK retailer to an international multichannel retailer.”

Published on Sunday 14 April by Editorial Assistant

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