Marks & Spencer last night delivered worse than expected clothing sales over the crucial festive period to confirm its status as one of the high street's weakest performers over Christmas.
In a deeply embarrassing move, the high street giant was forced to release its third-quarter results this evening – instead of early tomorrow – after key figures were leaked to the press.
Marc Bolland, the chief executive of M&S since 2010, said he had never witnessed such an "incident", adding: "It's very unfortunate. I don't want to joke about it." He admitted its performance was "not yet satisfactory" but blamed the sharp fall in its clothing sales on its decision to avoid getting sucked into the fierce discounting across the high street before Christmas.
The retailer's general merchandise sales at stores open at least a year tumbled by 3.8 per cent over the 13 weeks to 29 December, marking the sixth successive quarter of falling clothing and homewares sales at M&S. Its performance was significantly worse than rivals, Next and John Lewis, and will pile the pressure on Mr Bolland, who also unveiled a decline in half-year profits in November.
The general merchandise performance was worse than consensus City forecasts of a 1.5 per cent fall and even missed the bottom of analyst ranges of 3.5 per cent lower.
However, M&S's food business again delivered positive sales growth, and there was no profit warning. It maintained guidance on margins to be up to 0.25 per cent higher this year.
Mr Bolland said it had decided to "protect" profit margins by running 7 per cent less promotions and selling more clothing at full price. He added the market had been "highly promotional" before Christmas, citing hefty discounts of up to 70 per cent at some chains such as Gap. He said: "We did not promote as much as the market out there," adding that it also had less stock coming its Christmas clearance sale.
Food, which accounts for half of the group's revenues, delivered sales up by 0.3 per cent, although this marked a slowdown on previous quarters this year. Mr Bolland said: "Our food business had record sales over the key Christmas period." He said it delivered record food sales of £330m over the two key trading weeks before Christmas, citing barnstorming sales of chocolate and fresh turkeys.
Total UK sales rose by 0.3 per cent while group revenues, including overseas, were up by 0.6 per cent.
But Bethany Hocking, an analyst at Investec, said: "Food has not saved the day for M&S. General merchandise has some significant challenges, in our view, and the Q3 result marks an underlying deterioration on Q2 – so if anything it appears this division is getting worse."
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