Marks & Spencer's sales are still in free fall
The struggling retailer announced:
- A 0.9% drop in food sales;
- Clothing & home sales down 8.9%;
- Total UK sales down 4.3%;
- Group sales up 1.3%.
Independent retail analyst Nick Bubb called the fall in clothing sales "sickening" in an emailed statement this morning, saying: "With the City looking for a like-for-like decline of at least 4%, despite weak comparables, Marks & Spencer was expected to have gloomy news about Q1 Clothing sales to report today… But the news is horrible."
M&S has been struggling for half a decade now, with former CEO Mark Bolland presiding over 14 straight quarters - three and a half years - of declining sales in general merchandise, the clothing and home division.
While food has been a bright spot, clothing is seen as the core of M&S' business and investors are concerned that the retailer has been unable to halt the rot. There's a feeling that it is stuck in the past and has failed to keep pace with the fast fashion trend that retailers like Primark and Uniqlo have developed on the High Street.
New CEO Steve Rowe, who was promoted to replace Bolland in January, tries to put a brave face on the first quarter numbers, saying they're as a result of reducing promotional activity, which is part of the turnaround plan.
Rowe says in a statement:
"A key part of our recovery plan for Clothing & Home is lowering prices and reducing promotions. As a result, we ran fewer price promotions while continuing to lower prices to deliver real value to our customers, and moved the summer sale to July. We knew our actions would reduce total sales but we are seeing some encouraging early signs. Our Food business continues to strongly outperform a deflationary market, with LFL sales slightly down when adjusted for Easter timing."
Rowe says it is "too early to quantify the implications of Brexit" and full-year forecasts are unchanged. M&S says it "continue[s] to manage the business for the challenging market environment."
Marks & Spencer shares are down 0.71% after 15 minutes of trade in London.