Marks & Spencer has suffered a number of calamitous weeks of sales over the past month, putting down an ominous marker for Christmas and hammering home the dire trading conditions on the high street.
The retail giant’s underlying sales on clothing and home related-products are understood to have fallen by about 19 per cent for the week ending last Saturday, 29 November.
The revelation comes as Marks & Spencer today unveils its second sales day in a fortnight, with 20 per cent off all clothing, wine and home products in stores and online.
Its general merchandise like-for-like sales are understood to have fallen by an average of 15 per cent for the past four weeks. However, this figure strips out the week when M&S held its last 20 per cent-off sales day on 20 November – its first pre-Christmas sale since 2004.
Last week’s trading figures at M&S illustrate just how volatile current trading is for many high-street retailers, as they engage in ferocious discounting amid some of the worst trading conditions of the past 30 years.
Nick Bubb, the Pali International analyst, said: “There can be no doubt that M&S is having to do this [20 per cent-off] sale again, as they did in 2004, because trading is so awful. It will pull business forward from next week, but only at the expense of the M&S brand and its long-term pricing power, auguring badly for profits in 2009.”
An M&S spokesman said: “We cannot comment on our trading figures.” However, industry sources said the recent weekly trading figures were being heavily skewed by the one-off sales, which drove huge volumes of sales through M&S’s tills last month.
Sources said customers bring forward or delay large amounts of spending around the one-off sales. Typically, there is a hefty spike in sales that week, but revenues fall off sharply the following week, particularly if customers hear that another sale is coming up. However, M&S, along with other retailers, is thought to have seen a deteriorating sales trend since the UK banking crisis hit consumer confidence like a train in the autumn.
Speaking at the Drapers Fashion Summit on 19 November, M&S’s chairman Sir Stuart Rose said there had been a further marked fall in consumer spending in recent weeks. “There’s been a step-down in the last two to three weeks,” he said. “I don’t think there is anyone who hasn’t seen a softening.” A source said the retailer’s poor recent trading was “an economic issue, not an M&S problem”.
While there is no suggestion whatsoever that M&S will post underlying general merchandise sales as dire as 19 per cent down, when it updates the market after Christmas, the City has become increasingly bearish about the high-street bellwether’s financial performance this year. For the 26 weeks ending 27 September, M&S posted UK like-for-likes down 5.7 per cent. It delivered pre-tax profits of £1bn in its last financial year, but some City analyst have subsequently slashed their profit forecasts down to about £640m for this year.
For today’s sale, M&S will open many stores early and extend opening hours until midnight. Sir Stuart said: “Our last one-day Christmas spectacular went down really well with customers. We know that people are feeling the pinch and we want to give them a helping hand in the run-up to Christmas.”
Debenhams kicked off a 20 per cent-off sale yesterday, which is expected to continue over the weekend.