14th consecutive quarter of falling sales for Marks & Spencer fashion and home wares division
Marks & Spencer has reported a further fall in general merchandise sales, although its food business registered a marginal like-for-like improvement in the key Christmas quarter. - Credit: PA
Marks & Spencer today reported more dire trading for its clothing division after it was beset by online delivery problems and unseasonal weather conditions.
The general merchandise division, which includes fashion, posted another quarter of declining sales over the Christmas period, with like-for-like sales down by a bigger-than-expected 5.8% in the 13 weeks to December 27.
Chief executive Marc Bolland highlighted an “unsatisfactory performance” in M&S’s e-commerce distribution centre but said its food halls were busy over the festive period, with like-for-like sales rising 0.1% in the period.
Today’s figures for the general merchandise division are the worst since the start of the 2012-13 financial year and extend the run of declines in the division to a 14th consecutive quarter.
M&S said its new website performed well operationally but this was offset by disruption at its new distribution centre in Castle Donington, Leicestershire.
Customers complained that they were not able to make in-store click-and-collect orders for the next day, while deliveries to home addresses, which normally take three to five days, were taking up to 10 days. M&S said it had made progress in addressing the issues and that its delivery service was now back to normal.
Trading in October and November was also affected by unseasonal weather conditions which M&S said impacted sales across the clothing sector and resulted in a highly promotional market.
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The company added: “We deliberately held back the level of discounting especially in December. While this had an adverse impact on sales we delivered a good performance on gross margin.”
M&S shares opened 3% lower today after the worse-than-expected performance dashed hopes in November of an improved trend in clothing sales.
Neil Saunders, managing director of retail analyst Conlumino, said: “We believe that M&S’s strategy of becoming more fashion-focused is generally sound.
“New collections, including those in place over the Christmas period, had some strong pieces and, generally, looked good - especially in larger stores.
“However, it is fair to say that the rejuvenation of M&S’s clothing offer is at a relatively early stage and it has not yet completely won back the confidence of consumers. This means that performance can easily be blown off course by negative headwinds, and the gusts certainly blew this Christmas.”
