Marks & Spencer has recorded a mixed bag of results during its Christmas quarter with a slowdown in trading in its food halls and yet another steep decline in sales in its embattled clothing arm.
For the 13 week period ending December 30, the high street giant raked in £1.19 billion in sales in its its UK clothing and home division, which represented a 2.3 per cent drop on a total basis and a 2.8 per cent fall on a like-for-like basis.
Meanwhile, it conceded that its food arm was experiencing “ongoing under-performance” after like-for-like sales fell 0.4 per cent and total sales slowed down to a 3.6 per cent growth to £1.66 billion.
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Overall in the UK, M&S’s sales grew by 1.1 per cent to £2.85 billion and like-for-like sales dipped by 1.4 per cent.
Online sales at lifted three per cent to £309 million, while its ongoing move to pull out of international markets saw overseas revenue plunge by 9.8 per cent to £309 million.
These figures all contributed to M&S’s total group sales for the third quarter to drop 0.1 per cent to £3.16 billion.
The results prompted M&S shares to fall by more than two per cent this morning.
However, the latest trading update from M&S – which is often regarded as a bellwether for UK retail – was not as bad as feared as they did not issue a profit warning like other major UK retailers Debenhams, Moss Bros and Mothercare did in the past week.
Chief executive Steve Rowe said the retailer remained on track to meet full-year profit expectations.
M&S also said an uplift in trading over the key Christmas weeks helped it recover after a tough October amid a weak clothing market and intense competition in the food sector, especially with consumer spending under pressure amid rising inflation.
M&S added that it held off from slashing prices, which also helped sales grow both in store and online in the weeks leading up to Christmas.
“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 under-performance in our food like-for-like sales,” Rowe said.
On its food arm, Rowe said M&S had “a lot to do to get our business back on track”, having disappointed in the last few quarters despite rivals enjoying a sales boost from rising inflation.
Rowe added that the retailer was pushing on with turnaround plans after announcing alongside half-year results in November that it would accelerate plans to close under-performing clothing stores and slow expansion of its food arm in order to restore its fortunes.
This means M&S now aims to open 80 Simply Food shops this financial year, after previously aiming for 90 stores.
It also announced earlier this week that it would outsource more than half of its 430 IT roles under a technology overhaul that will save around £30 million a year.