‘Mixed’ final quarter for Marks & Spencer as clothing and homeware sales fall again

Marks & Spencer's clothing business has come under further pressure.
Photo: Stefan Rousseau/PA Wire

Marks & Spencer's clothing business has come under further pressure. Photo: Stefan Rousseau/PA Wire - Credit: PA

Retail giant Marks & Spencer is facing further pressure to shore up its clothing business after a “flat market” hit final quarter.

The high street bellwether said clothing and home like-for-like sales fell by 2.7% in the 13 weeks to March 26, as price deflation created a “challenging backdrop” for trade.

However, the figure was ahead of city expectations of a 3.4% decline, and marked an improvement on its performance in the third quarter.

Its comes days after new chief executive Steve Rowe said he would remain in charge of the clothing and home division because he was “personally committed” to getting it right.

M&S said its food business continued to outperform a highly competitive market as like-for-like sales remained flat over the period.

Mr Rowe said: “We had a mixed performance in the final quarter of the year. Our food business once again outperformed the market by 3.5%.

“Although the sales decline in clothing and home was lower than last quarter, our performance remains unsatisfactory and there is still more we need to do. Turning around our clothing and home business by improving our customer offer is our number one priority.”

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The retailer said it had bolstered the number of products in its spring and summer clothing range compared with last year, with sales in its Autograph range climbing 10%.

It also reduced the amount of clothes on promotional discount, a move it said it would continue to follow throughout the year.

But while it invested in lowering prices, M&S said it was still faced with the same challenge as the third quarter when it had to move more stock into sale.

The retailer said it also benefited from an earlier Easter, handing a 0.4% boost to clothing and home sales and a 1% rise in food.

M&S’s latest move to revive women’s clothing sales came in February when it sealed a tie-up with TV presenter Alexa Chung to launch a fashion collection inspired by the company’s extensive range.

The retailer said its food business benefited from moves to bolster its footprint across the UK, as it opened 80 new stores and grew market share by 4.3%.

It also benefited from customers splashing the cash on the special occasions, as it enjoyed its “biggest ever” Mothers’ Day.

Meanwhile, the company said its online business had delivered a “good performance”, with sales rising 8.2% after it ran fewer online-only promotions.

Its trading update comes after Next chief executive Lord Wolfson warned last month that retailers face a bumpy road ahead. He said 2016 would be the toughest year the sector has faced since 2008, as it braces itself for a slowdown in consumer spending.

Mr Rowe, who took over from under-pressure chief executive Marc Bolland on Saturday, said on Monday that M&S had a habit of over-complicating things and he would endeavour to keep it simple in his efforts to improve the business.

He is expected to shed light on his turnaround plan when the company announces its full-year results in May.

Despite improving its clothing and home sales, the company has still not seen one quarter of like-for-like sales growth in the past 21 quarters.

However, total group sales over the fourth quarter grew by 1.9%.

The company said: “Despite improved sales in both our franchise and owned businesses in International, the previously guided currency pressure and challenging trading conditions are still expected to heavily impact the full year profitability.”

Shore Capital analyst Clive Black said Mr Rowe would be a “force of good in the business, one that can build upon a lot of heavy lifting undertaken by predecessor Marc Bolland”.