Surpise slide in sales knocks Marks & Spencer
RETAIL giant Marks & Spencer today revealed a surpise fall in underlying sales but insisted it remained on track to hit its annual profits forecast.
In a trading statement for the 13 weeks to March 31 – the final quarter of its financial year – M&S admitted it ran out of stock on some of its best-selling lines of womenswear during the opening months of 2012.
The company, which operates more than 700 stores in the UK where it is the biggest fashion retailer, said like-for-like sales fell 0.7% during the period, disappointing the City after growth in the previous quarter.
Non-food sales, which had been expected to return to growth, were down 2.8% on a same-store basis, with the company vowing to sort out supply problems that left it short of popular womenswear lines.
The surprise fall in sales caused M&S shares to fall 3%, even though it remains on course to meet City profit expectations. Seymour Pierce stockbrokers said the 2.8% decline in general merchandise sales compared with its own forecast for a 1% decline.
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M&S chief executive Marc Bolland said the womenswear problems meant that it sold 100,000 items of knitwear in the period, whereas it could have sold three times that many, after it was caught out by the snow in February, which stimulated demand.
It also could have sold double the number of “pump” shoes, which proved more popular than expected.
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Mr Bolland said: “It’s a temporary thing. We were a bit underbought in some areas. That was a miss in our merchandising planning. We were bang on-trend but we should have a bit more of some of our lines.”
He said trading in recent weeks had gone well, with new lines from Twiggy and those seen in a new advert featuring Myleene Klass and Dannii Minogue in which Gary Barlow sings the Beatles classic Here Comes The Sun proving popular.
Total UK sales of clothing were down 0.3% as the problems in womenswear offset a stronger performance in menswear, lingerie and childrenswear. But sales of homewares were down 7.5%, mainly as a result of its decision to pull technology products from its shelves.
Like-for-like food sales rose 1% as it benefited from a record Valentine’s Day promotion on ready meals and the popularity of its Simply Fuller Longer healthy eating range.
Mr Bolland added that the celebrations around the Olympics and the Queen’s diamond jubilee would play into M&S’s hands.
He said: “The summer is going to be celebrated. This is not a statement where we say the customer is worrying us. But we want to deliver better for customers.”
Ongoing cost savings mean the group is confident of hitting expectations for profits for the year to the end of March. Investors expect profits of �694million, compared to �714.3m the previous year.
And it said it has shaved �100m off plans to roll out its revamped stores across the estate to make them easier to shop in. The programme, which has already seen 70 stores converted, will now cost �600m.