Poor trading in merchandise goods has meant Mark & Spencer’s (M&S) fourth quarter like-for-like (LFL) sales remained flat in the UK, results revealed today.
Group sales for the retailer rose 2.3 per cent in the 13 weeks to April 2nd 2011, with LFL general merchandise trading in the UK falling 3.9 per cent year-on-year due to tough trading conditions.
M&S explained that Q4 compares badly with the same period last year, as 2009/10 was a 53-week year and that the last 13 weeks did not cover five days of Christmas trading included in the same period 12 months ago.
When this is taken into account general merchandise sales actually grew 0.7 per cent LFL, while UK LFLs increased 2.2 per cent and group sales rose 4.2 per cent year-on-year.
Marc Bolland, CEO of M&S, commented: “We had a good fourth quarter in a challenging trading environment. In times like these customers are increasingly turning to M&S for value, quality and innovation.
“Strong products backed by great advertising meant we outperformed the market and grew share in both food and clothing.”
According to recent Kantar Worldpanel data, M&S grew market share in clothing by 30 base points to 11.6 per cent and in food by ten base points to 3.8 per cent.
Its food sales were up 3.4 per cent LFL in the UK, total international sales increased 12.6 per cent and M&S Direct trading jumped 13.7 per cent compared to last year.
Slowing non-food trade for the retailer in the UK reflects the dampened consumer spending seen across the sector, and another difficulty for M&S was that its general merchandise sales were also up against a healthy 9.1 per cent growth during the period last year.
The experience of food sales outperforming general sales matches that of fellow retailer John Lewis, which has often seen Waitrose propping up trading for the partnership since the turn of the year.
Bolland set out a plan to evolve rather than revolutionise the business when he took over as boss last year, and argued today that his strategy is still on course.
“The plans we laid out in November continue to build momentum, demonstrated by our collaboration in Home with Sir Terence Conran, our ‘bricks and clicks’ return to France, and, importantly, our ability to attract best in class talent,” Bolland added.
Looking forward the retailer expects operating costs to increase five per cent in 2011/12, gross margins to grow by as much as 25 base points year-on-year, and a two per cent rise and ten per cent rise in UK and international retail space respectively.