'Disappointing' M&S pays the price of a slip-up over womenwear
Marks & Spencer yesterday admitted it did not have enough women's knitwear and jackets during February's cold snap, as it posted a "disappointing" fourth quarter that missed City expectations.
The high street stalwart's food division, which accounts for nearly half of group revenues, performed better than clothing, but its sales growth was still sharply down on the previous quarter.
M&S, which serves 21 million customers in more than 700 UK shops, said it was "confident" of hitting the City's full-year profit targets, but its shares fell by 3.3p, or 1 per cent, to 364.4p.
The retailer posted a 2.8 per cent fall in general merchandise sales, which is dominated by clothing, over the 13 weeks to 31 March, lower than analyst forecasts of a 0.2 per cent rise.
While M&S partly attributed the fall to it withdrawing from selling technology products, the retailer did not buy enough best-selling women's clothing lines, such as its own-brand knitwear, jackets and ballet pumps.
Its chief executive, Marc Bolland, said: "February was extremely cold. That month we did not have enough knitwear and coats." He added as these items are largely made in Asia, a shortfall is "something that you cannot react to in four to six weeks".
The retailer said it sold 100,000 lines of M&S Woman knitwear, but it could have shifted 300,000 if it had enough stock. But Mr Bolland said it "performed strongly" on menswear, lingerie and kidswear.
Total UK sales at M&S rose by 1.2 per cent, boosted by new stores, while group sales, including overseas, grew by 0.8 per cent.
Its food business posted a 1 per cent rise in underlying sales, but this was lower than a 3 per cent rise in its third quarter. Assad Malic, an analyst at Credit Suisse, said: "The fourth-quarter results are disappointing across both food and general merchandise."
UK like-for-like sales at M&S fell by 0.7 per cent.
But tight cost controls means M&S expects to meet City profit forecasts of £694m, a 3 per cent fall on the £714m posted last year.
International sales at the group, which has more than 300 shops overseas in 43 countries, fell by 2 per cent, with Mr Bolland blaming the "macroeconomic" conditions in Ireland and Greece.
M&S has cut the cost of refurbishing its UK stores by mid-2013 to £500m from £600m, as it controls capital investment more tightly.
Despite its fourth-quarter wobble, Mr Bolland said the "consumer is a bit more positive".
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