Marks & Spencer has reported sales declines in both its grocery and fashion arms while warning that it expected “little improvement” in the near future.
For the six months to September 29, the retailer reported a like-for-like sales decline across its clothing and home division of 1.1 per cent, while total revenues dropped 2.7 per cent.
This was largely attributed to its store closure programme starting to affect margins, with 100 underperforming stores due shut by 2022.
Meanwhile, its food division saw a more significant like-for-like sales drop of 2.9 per cent, as well as a total drop of 0.2 per cent, with chief executive Steve Rowe telling the BBC that it was “trading behind expectations”.
Overall, M&S’s revenues dropped 3.1 per cent to £4.96 billion.
However, adjusted pre-tax profits rose two per cent to £223.5 million despite the sales drops and coming ahead of market expectations.
The interim update comes as the retailer ploughs ahead with its major restructuring programme, aiming to make cost reductions of £350 million by 2021.
Rowe said this meant “rebuilding the foundations of the future M&S”, adding that every “aspect of our ranges, how we trade, our supply chain and marketing is undergoing scrutiny and change.”
Despite this reportedly showing “very early signs of improvement”, the bellwether retailer was cautious to warn investors that it did not expect any notable improvement over the next few months thanks to “the growth of online competition and the march of the discounters”.
Hargreaves Lansdown’s senior analyst Laith Khalaf said: “The most recent missive from M&S makes for grim reading, despite the headline rise in profits.
“However expectations are already low, and while there are few signs of relief in its latest numbers, the broad direction of travel at M&S won’t come as a shock to anyone.
“Some good news for the retailer comes from an unexpected source. In the recent market turmoil M&S actually shored up its position in the FTSE 100, as its shares rose by 2.5 per cent in October, set against a five per cent fall in the wider UK market.
“With a reshuffle in the benchmark index looming in early December, recent share price performance is somewhat of a saving grace, though there’s still a month of trading left before the final scores on the doors are counted.
“M&S is in the midst of the turnaround plan, and so business performance can be expected to be rocky for the time being.
“Though at some point in the not too distant future, investors will want to see some light at the end of the tunnel.”