Belfast Telegraph

Festive M&S food sales show growth but revenue from clothes disappoints


Clothes sales at M&S failed to bring much Christmas cheer
Clothes sales at M&S failed to bring much Christmas cheer
Steve Rowe

By August Graham

Marks & Spencer's food division had a "standout" performance over Christmas, helping lift what was otherwise a disappointing trading period for the business.

UK food revenue grew 1.5% to £1.7bn in the three months to the end of December, the company said.

It has around 20 stores in Northern Ireland, and opened a new food hall in Carrickfergus, Co Antrim last year.

But despite the growth in food revenue, M&S clothes stores fared much worse, with sales in the clothing and home division dropping 2.7% to £1.1bn in the third quarter.

On a like-for-like basis, which strips out the effect of new stores and closures, UK revenue grew 0.2%.

Chief executive Steve Rowe said: "The food business continued to outperform the market, and clothing and home had a strong start to the quarter, albeit this was followed by a challenging trading environment in the lead-up to Christmas."

He added that "disappointing one-off issues" such as waste in the food business and the performance of its gifts range "held us back from delivering a stronger result".

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On a call with reporters, Mr Rowe said that, although customers purchased a lot of M&S food, "we bought more than we sold", but he promised that no food waste was destined for landfill.

The business stuck to its guidance, but warned that gross margins are likely to be at the lower end of expectations.

Meanwhile, online clothes sales failed to bring much Christmas cheer for M&S management. Online clothing and home revenue in the UK was up 1.5% - lower than expected.

But Mr Rowe said that changes made earlier in the year in clothing "have arrested the worst of the issues of the first six months and we are progressively building a much stronger team for the future".

Last year a former boss of the clothing division, Jill McDonald, was fired for failing to order enough womens' jeans as worn by TV presenter Holly Willoughby to keep up with customer demand.

Ms McDonald, a former boss at Halfords, left in July, with Mr Rowe taking control again of the division.

The company has been the UK's biggest seller of clothes, though Primark is coming close to stealing its crown.

M&S said it had to deal with competitors offering discounts to customers, and less furniture being dispatched.

In a bid to remedy the problems, M&S improved its search and rationalisation functions and launched an option for customers to pay in instalments.

International sales fell 2.3% to £251m.

Richard Lim, chief executive of consultancy Retail Economics, said: "Food performed particularly well, benefiting from stronger underlying household finances, but consumers also responded positively to more competitive pricing.

"It appeared that shoppers were prepared to indulge that little bit more this Christmas on food if they spotted value for money."

He added: "While clothing and home lagged overall growth, it still improved on previous performances.

"The major disappointment came in the online business that barely showed any meaningful signs of growth.

"Integrating a seamless digital proposition remains the key challenge for the retailer."

Belfast Telegraph

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