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M&S warns hard year in store as sales fall
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Posted by: forwardone
M&S warns hard year in store as sales fall
RETAIL doyen Marks & Spencer today reported its first fall in like-for-like sales in more than two years while also warning of continuing tough times on the high street.
The company, headed by recently-knighted chief executive Sir Stuart Rose, said sales on a same-store basis were down by 2.2 per cent over the 13 weeks to December 29.
Sir Stuart Rose insists M&S is 'well positioned' despite the fall in like-for-like sales
General merchandise fell 3.2 per cent and food fell 1.5 per cent, M&S said.
That marked the first time sales on that basis had fallen in nine quarters for Britain's biggest clothing retailer.
Clothing sales dipped 1.2 per cent, despite an all-star line-up for the group's Christmas advertising campaign, including Hollywood star Antonio Banderas who featured alongside celebrity models Twiggy and Erin O'Connor, while pop quartet Take That fronted its Autograph menswear campaign last autumn.
One bright note was a rise in online sales of 78 per cent between October and the end of December, while international sales lifted 15.1 per cent.
But the slide could threaten the company's chance of breaking through the £1 billion pre-tax profits barrier for the first time in a decade.
Before today's results, analysts had trimmed forecasts marginally to £1.07bn as retail conditions tightened.
Sir Stuart, who has spearheaded a turnaround of the chain in the past two years, said that business conditions had turned down during November and December. And he cautioned: "We expect trading conditions to remain tough throughout 2008."
However, he insisted that M&S, which has around 520 UK outlets, was "well positioned with a strong product offer and better-than-ever values across our business".
The figures significantly undershot already lowered forecasts from analysts – many of whom had been expecting a rise of around one per cent, or at worst flat sales – and follow a series of gloomy updates from British retailers concerning crucial Christmas trading.
Freddie George, an analyst at Evolution Securities, said: "The figures are very disappointing."
M&S has been involved in a store revamp programme to help boost trade and said today that it h
ad overhauled around 70 per cent of its stores since 2006.
Nick Bubb, an analyst at Pali International, added: "M&S maybe made the mistake of leading people to believe there would be more of a benefit from store refurbishments."
Over the same period last year, M&S clocked up a sales rise of 5.6 per cent. Sir Stuart stressed the retailer had not resorted to heavy price cuts to drive sales, although he added that M&S prices had fallen by six per cent. He said: "We did not discount in the run-up to Christmas. Stock levels were well controlled over the period."
Earlier this week, the British Retail Consortium said high street sales grew at their slowest pace since March 2006 during December, making it the worst Christmas for retailers in three years
Sir Stuart said all UK business was facing "a real crunch" but insisted M&S would "out-perform" the market over the next 12 months.
Business.scotsman.co.uk