Marks & Spencer's recovery is being threatened by sluggish pre-Christmas sales across key lines such as menswear and womenswear, according to internal sales figures.
Sources with access to M&S's confidential sales data have told The Independent on Sunday that the problem is worst in women's fashions, where poorer than expected sales have left the company with too much stock.
The run-up to Christmas is critical for retailers, not only because of increased sales volumes but because of the imminent arrival of spring ranges. If M&S is overladen with stock, it will be forced to discount heavily in the final days of Christmas shopping.
The sales figures, prepared earlier this month for M&S chief executive Roger Holmes and chairman Luc Vandevelde, also reveal problems in menswear. It is understood that sales have been under target for much of October and November. Menswear only met its target this month.
The figures will be of prime concern to Yasmin Yusuf, M&S's creative director, who is credited with the revival in the company's clothing sales.
Unseasonably mild weather is thought partly to blame. Richard Ratner, retail analyst at stockbroker Seymour Pierce, said: "The danger is that time is running out to clear winter clothing from the shelves. After Christmas there's a worry that people will have to discount quite heavily to unload merchandise."
Despite the problems in clothing, M&S figures show that food sales are on track.
M&S refused to comment, saying only that Christmas sales data will not be made public until mid-January. However, the news will disappoint the City. Under Mr Vandevelde and Mr Holmes, M&S had started to show signs of a full recovery after a disastrous 2000.
M&S's shares were the best performers in the FTSE 100 in 2001, and though they have fallen 7 per cent this year, this compares well with the 25.7 per cent fall in the FTSE 100.
Last month M&S announced better-than-expected half-year profits of £285.3m to 28 September. Critically, however, the latest Christmas sales figures cover the period after the results.
As well as mild weather, one of M&S's biggest problems is, ironically, last year's bumper Christmas. Along with most high-street chains, it experienced a large rise in sales, partly due to 9/11 which forced many people to cancel their holidays. Therefore, in the run-up to Christmas, shoppers had more spare cash to spend. David Smith, director of corporate affairs at the British Retail Consortium, said: "Last year was special. This time we will be back to normal circumstances."
Another key barometer on the high street will be the performance of Arcadia and Bhs, controlled by retail tycoon Philip Green. As both are private companies, Mr Green is under no obligation to disclose figures. If sales are good, however, many believe he will publish them anyway. Asked how Christmas trading was going, Mr Green would only say: "It's OK. It's OK."
Research group Verdict predicts consumers will spend £70bn in the last quarter of 2002. This would be a 4.1 per cent rise on last year, but Verdict points out it would still be the lowest rise since 1999. Its chairman, Richard Hyman, said: "The slowdown in retail sales has already begun."
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