M&S sees clothing sales fall again

Written By Unknown on Rabu, 05 November 2014 | 19.12

5 November 2014 Last updated at 09:59

Marks and Spencer has reported its 13th consecutive quarterly drop in clothing sales, blaming the "unseasonal conditions in September" for the poor performance.

The 130-year old retailer said like-for-like general merchandise sales - which are primarily clothing - fell 4% in the second quarter.

Despite the drop M&S boss Marc Bolland said he was "pleased" with its progress in "challenging market conditions".

Shares rose 8% in early trading.

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Analysts said the High Street chain's performance was largely better than expected.

Half-year pre-tax profit fell 0.4% to £279.4m, but underlying profits rose 2.3% to £267.6m which was ahead of expectations.

Online sales at its revamped website, which was re-launched in February, were down 4.6% in the second quarter, but this was an improvement on the 8.1% drop it reported in the previous quarter.

And M&S said sales of womenswear also continued to improve. It did not give a quarterly performance, but said total sales were up 1.3% in the first five months of the year.

In food, like-for-like sales rose 0.2% in the second quarter, much weaker than the first quarter, but in line with analyst forecasts.

Across the M&S group, like-for-like sales fell 0.2% in the three months to 27 September, but were up 1% for the half-year.

And a closely-watched City measure - the margin at which M&S sells its clothing - also improved by more than expected.

Analysis: Kamal Ahmed, BBC business editor:

The City is likely to welcome Marks and Spencer's results - gross margins are up, profit before tax is up (for the first time in four years), cash generation is up and dividends are up.

But the overall story is still one familiar to all those who have been watching M&S for any length of time - food doing well but overall general merchandising - including vital clothing - down.

The retailer does appear better positioned to gain when real incomes start rising, with up-market store refits. There has been some improvement in womenswear sales.

One big worry will be the performance of the website where sales are still down over 6%, although M&S insists it is turning around rapidly. It will need to, Christmas is just around the corner.

'Glimmer of hope'

Neil Saunders, managing director of Conlumino, said the results suggested the overall picture was improving, with the pick-up in womenswear sales indicating "the years of decline may well have bottomed out".

"Beneath the surface some faint glimmers of hope are beginning to shine through as the company's strategy starts to deliver," he added.

Marc Bolland, Marks and Spencer chief executive

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M&S boss Marc Bolland rejects criticism over clothing sales

But Phil Dorrell, director of the retail consultancy Retail Remedy, said "no amount of hand-wringing about September's unseasonal weather can explain away such weak clothing sales".

"The brand is finally introducing more clarity to its over-complex clothing lines, but look beyond the flagship stores and many are still a mess of baffling sub-brands, and feel like museums where older people go to browse endless rows of black slacks," he added.

However, Mr Bolland told the BBC's Today programme that he was encouraged by the improvement in womenswear.

"The trend is positive. Customers are telling us the style is back at M&S," he said.

Mr Bolland said people should disregard September due to the warm weather, and said without that month womenswear sales had risen.

However, he said market conditions continued to be challenging.

"As a result we remain cautious about the outlook for the remainder of the year," he added.

M&S is not the only retailer to blame the unusually warm September for affecting trade.

Clothing retailers H&M and Next have both said that the weather has hit sales.


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