Sales woe casts doubt on M&S recovery

Click to follow
The Independent Online

Marks & Spencer surpassed even the worst fears of City analysts today as disappointing sales figures cast new doubt on the retail group's recovery.

Marks & Spencer surpassed even the worst fears of City analysts today as disappointing sales figures cast new doubt on the retail group's recovery.

Fresh from poor clothing sales over the Christmas season, M&S added to the gloom surrounding its recent performance with a 3.4% decline in like-for-like sales for the 11 weeks to March 27.

Worryingly for M&S, the food department - seen as the backbone of its previous success - endured a lacklustre period with same-store sales down 1.4%.

M&S chief executive Roger Holmes conceded that sales were "clearly not good enough" and pledged to take action on a number of fronts.

In the City, where M&S shares fell 5% in a weak market, analysts said management was now under pressure to show the recovery that started in 2002 had not run out of steam as competition increases on the high street.

Nick Bubb, of Evolution Beeson Gregory, said: "M&S was expected to report poor fourth quarter sales, but the news is even worse than expected. The loss of market share in food is nearly as alarming as the loss of market share in clothing."

Despite the latest disappointment, M&S said cost controls meant it was still likely to meet City results forecasts, which are for profits in the year to April 3 of around £760 million - up from last year's £713.7 million.

Priorities highlighted by the business include the need for greater consistency in the appeal of womenswear, more inspirational stores and improvements to the way its stores, head office and supply chain operate.

Former Selfridges boss Vittorio Radice, who recently became executive director for general merchandise, will lead the fight to win back clothing sales.

Mr Holmes believed visitors would soon start to see improvements from greater choice and sharper pricing but that the impact of new appointments, particularly in womenswear, would not have a full impact until next spring.

In terms of the M&S recovery, he added: "We are at a different stage than we were 18 months to two years ago but the market and our customers move on and we need to improve more quickly in what we offer them.

"We still have one million customers coming through our stores each week but we need to do more to convert that customer traffic into sales."

Across the group, total sales were down 0.1% in the quarter but up 1.8% for the 52 weeks to March 27. The like-for-like figure for the year showed a decline of 0.4%.

A quarterly sales fall of 13.7% was also seen in homeware as M&S continued to make changes to its product offering in the department.

Mr Holmes also dismissed reports that major shareholders had expressed concern to the board about the time spent at M&S by Luc Vandevelde, the former chief executive who now occupies a part-time role as chairman.

He said: "Our roles are very clear. Luc is part-time and not unlike other FTSE 100 Index chairman has other interests and it is natural for him to do so."

Mr Vandevelde, who joined M&S in February 2000, was seen as the architect of the M&S recovery, with operating profits in 2002 beating anything achieved by the group over the previous four years.

Comments