What's Down: British retailer Marks & Spencer reported a bigger-than-expected drop in non-food sales in the Christmas quarter after deciding to offer fewer discounts just as other rivals were offering more.
No post-holiday glow for Marks & Spencer
The British retailer Marks & Spencer reported a bigger-than-expected drop in non-food sales in the Christmas quarter after deciding to offer fewer discounts just as Debenhams and other rivals were offering more.
In a third-quarter update, rushed out late on Wednesday after trading data was leaked to Sky News, the company said sales of clothing, footwear and homewares slumped 3.8 per cent in the 13 weeks to December 29 at UK stores open more than a year.
That compared with analysts' forecasts in a range of up 0.5 per cent to down 3.5 per cent and a second-quarter decline of 1.8 per cent. The sales look weak when set against recent updates from Next, John Lewis and Debenhams.
"Our general merchandise performance is not yet satisfactory," said the chief executive Marc Bolland.
He said he was confident steps being taken by a new general merchandise management team, led by the former food boss John Dixon, would address this, although he reiterated that the new team would not make a major effect until M&S launched its next autumn and winter collections in July.
"We know what we have to do on general merchandise," he said.
Mr Bolland was asked if he was considering his job security, but the finance director Alan Stewart replied: "Mark has the full support of the board. The shareholders are supportive of the strategy."
Like-for-like UK food sales rose 0.3 per cent, compared with analysts' forecasts of down 0.8 per cent to up 1.5 per cent and an increase of 1.6 per cent in the second quarter.
Total UK like-for-like sales fell 1.8 per cent, having been flat in the previous quarter.
"We had a policy to protect margins on general merchandise," said Mr Bolland, pointing out the retailer was 7 per cent less promotional this year than last year, carrying 5 per cent less stock into its post-Christmas sale.
The company, a mainstay of British town centres and best known for staples such as socks and underwear, would decide "quarter to quarter" whether to maintain this policy.