November 5, 2013 / 7:13 AM / 6 years ago

Marks & Spencer clothing sales fall for ninth straight quarter

LONDON (Reuters) - British retailer Marks & Spencer posted a ninth straight quarterly fall in clothing sales on Tuesday, piling the pressure on chief executive Marc Bolland who has built his recovery plan around higher quality and more stylish fashions.

A window display is seen at a Marks & Spencer shop in central London May 21, 2013. REUTERS/Suzanne Plunkett

Bolland, who joined Britain’s biggest clothing retailer in 2010 with a package worth up to 15 million pounds, said much vaunted new autumn/winter ranges were starting to have an impact just weeks after being fully introduced.

But he refused to predict a return to underlying sales growth for clothing in the crucial Christmas quarter, even though comparative numbers for 2012 are weak.

“We’re looking at a gradual improvement, we haven’t given ourselves a timeline,” he told reporters.

Some analysts were left underwhelmed by a decline in second-quarter underlying clothing sales that was only slightly less than the previous quarter and said Marks & Spencer (M&S) would need a strong Christmas to hit full-year profit forecasts.

“The walls are closing in on Marc Bolland,” said James McGregor, director of retail consultants Retail Remedy.

Britain’s retailers have enjoyed a better few months recently as the economy moved back into growth, though a warm autumn has hampered some clothing chains’ ability to shift winter ranges and executives see continued pressure on consumers with wage rises lagging inflation.

Next, Britain’s No. 2 clothing retailer, raised its profit guidance last week, while discount chain Primark threw M&S’s performance into stark relief on Tuesday by reporting a 44 percent jump in full-year profit, on sales up 22 percent.

“If current trends continue, (Primark’s) customer base will be equal in size to M&S within two years,” said Ian Mitchell, head of fashion at Kantar Worldpanel.

M&S, which also sells upmarket food and homewares, reported a 9 percent fall in first-half profit - down for a third year running, though in line with expectations and cushioned by a strong performance from its food business.

“Feels a bit like a score draw for the bulls and the bears on M&S. General merchandise isn’t showing any great pick up, but food looks OK,” said one top-20 shareholder in the firm.

“The rematch is to be played over the Christmas trading period,” the investor added on condition of anonymity, predicting shareholders were likely to reserve judgment on Bolland’s stewardship until full-year results in May.

At 1430 GMT M&S shares, up 27 percent this year on recovery hopes and bouts of takeover speculation, were 4.4 percent higher at 508 pence, though still well below a 2007 high of 759 pence.

EARLY SIGNS

M&S, which serves 21 million customers a week from nearly 770 British stores, said sales of non-food products - including clothes - at stores open over a year fell 1.3 percent in the 13 weeks to September 28, its fiscal second quarter.

That compared with analyst forecasts of down 0.4-2.5 percent and a first quarter decline of 1.6 percent.

While some of the autumn/winter ranges - the first from a new clothing team led by John Dixon, the former boss of M&S food - hit stores on July 25, the full launch together with an advertising push featuring some of Britain’s biggest female celebrities, including actress Helen Mirren and artist Tracey Emin, did not kick off until September 12.

“Although only in store for three weeks of the half year, our autumn/winter collection has been well received by customers, and we have seen some early signs of improvement,” said Bolland, who is in the final year of a 2.3 billion pound, three-year investment drive to revamp the 129-year-old group.

N+1 Singer analysts said there was a precedent for new ranges turning round M&S’s performance - in Autumn 2005 when its stock rallied over 40 percent in six months following a step-change in its product offering under CEO Stuart Rose.

Slideshow (4 Images)

But others were concerned about a bigger-than-expected drop in first-half gross profit margin in the non-food business that the group hopes will be made up over the full financial year by a better performing food business.

M&S said its overall expectations for the 2013-14 year were unchanged after first-half profit before tax and one off items fell to 261.6 million pounds, on sales of 4.9 billion pounds.

The food business, which contributes over half of group sales, saw second-quarter like-for-like sales up 3.2 percent - an 18th straight quarter of growth.

Additional reporting by Sinead Cruise; Editing by Mark Potter

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below