Marks & Spencer posts first increase in fashion and home sales for nearly two years

Marks & Spencer in Oxford Street, London.
Photo: Charlotte Ball/PA Wire

Marks & Spencer in Oxford Street, London. Photo: Charlotte Ball/PA Wire - Credit: PA

Marks & Spencer has revealed a return to sales growth in its embattled clothing arm for the first time in nearly two years thanks to an overhaul of its ranges and the timing of Christmas.

The retail bellwether said like-for-like sales in its clothing and home division rose 2.3% in the 13 weeks to December 31, the first growth since the January to March quarter in 2015.

Chief executive Steve Rowe said “better ranges, better availability and better prices” helped sales recover, but the hike also came after a dismal performance a year earlier and it was boosted by an extra five trading days over the festive season.

M&S also posted a 0.6% rise in like-for-like sales across its food halls over the festive quarter.

But the group said around 1.5% of the total clothing and home sales uplift came from the extra trading days, which also boosted food sales by around 0.3%.

And it cautioned over a knock-on hit to fourth quarter figures due to the timing of sales as well as a later Easter this year.

Mr Rowe said the group’s clothing turnaround came as it battled against a “difficult marketplace”.

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The group has been revamping its clothing offer, cutting everyday prices for nearly a third of its ranges, and increasing staff numbers on the shop floor.

Mr Rowe said: “I am pleased with the customer response we have seen to the changes we are making in line with our plan for the business.”

He added the group would plough on with its restructure plans “against the background of uncertain consumer confidence”.

M&S announced plans in November to close around 30 UK stores and convert 45 more into food-only shops, while also announcing a retreat from a raft of international markets.

Shares in the group surged more than 4% in early trading as Mr Rowe cheered a “great Christmas” for the group.

But he stressed there was more work to do in turning its clothing sales around and suggested this quarter may not mark a return to sustained sales growth yet.

He said: “We intend to grow the business. It will take time for the consumer to notice that.

“Some of the actions we take in the short term will result in negative periods.”

The chain’s figures shrug off gloomy warnings from rival Next, which last week sounded the alarm over profits following dismal Christmas trading and said 2017 would be “even tougher” amid an ongoing shift in spending away from fashion.

Mr Rowe said consumer confidence was fragile but “fairly stable”, although he confirmed fears of a long-term trend for “people to buy less clothing”.

The group’s “self-help story” and turnaround actions should help M&S ride out the tougher conditions, he said.

In its third quarter update, M&S said it “substantially” cut back on promotions, resisting pressure for heavy discounts over Black Friday in November and launching just one clearance sale that started on Boxing Day.

The group has instead reduced everyday prices on more than 2,000 products to lure customers back after suffering a long-run of slumping sales in its clothing and home business.

Its long-awaited return to sales growth in the clothing arm comes after sales slumped nearly 6% in an exceptionally weak performance a year earlier.

Total UK sales over the 13 weeks to December 31, 2016 rose 4.5% or 1.3% on a like-for-like basis, with its website seeing growth of 9.4%.

The group’s international arm saw sales lift 2.9% on a constant currency basis.