Further declines in clothes sales performance leave M&S cautious but driven
Marks & Spencer's new fashion range faces increased pressure to deliver a turnaround for the beleaguered retailer after it reported an eighth successive quarter of falling like-for-like sales in its clothing division today.
The autumn/winter collection, which will begin to arrive in stores from the end of this month, is being seen as a key test of the store's top fashion team after a major revamp last year amid an alarming decline in revenues.
Figures today showed the decline continued with a like-for-like slump of 1.6% in general merchandise sales in the 13 weeks to the end of June, though total sales were slightly up, by 0.5%.
Chief executive Marc Bolland insisted that there were signs of improvement, but comparisons were up against a dire performance in the period last year when like-for-like sales slipped 6.8%.
Analysts Conlumino said this suggested the latest progress was "extremely limited" and that while M&S seemed to be pinning its hopes on the new fashion range, problems could run deeper.
Ahead of the chain's annual general meeting at Wembley Stadium today, Mr Bolland insisted that his recovery plan is on track.
Today's trading update showed an overall like-for-like sales improvement of 0.3%, after growth in the food division of 1.8% offset the decline in general merchandise. Total food sales were up 4.5%.
Mr Bolland said: "Our general merchandise business showed some improvement this quarter and the food business delivered another excellent performance."
Total UK sales increased 2.7% with group sales up 3.3%, helped by international performance, where takings were ahead 8.7%.
Online sales were up strongly too, by 29.9%, reflecting management plans to transform the business into what it describes as an "international, multi-channel retailer".
The weak performance of the clothing division over the quarter was blamed on poor weather in April and the impact of heavy promotional activity in June.
A fall in market share was attributed to M&S being more adversely affected by the delayed start to good weather in sales of casual tops and bottoms, where it has a large proportion of the total.
Marks & Spencer said that its outlook remained cautious given challenging trading conditions. Mr Bolland said the business was taking a "step-by-step approach to improvement".
He said that consumer optimism was steady rather than improving though there had been a pick-up among older customers.
Asked about how M&S would respond to the expected arrival of the royal baby later this month, he said: "We would hope that we would be able to celebrate that in a positive way very shortly."
The retailer's new clothing range, which has been well received by industry experts, will begin to go on sale in stores and online from the end of this month.
However Mr Bolland said the main marketing push for the range would not begin until September after the end of the summer holiday period when many consumers will have been away.
Its launch is being seen as the key test for senior figures such as John Dixon, the new head of general merchandise brought over from the successful food division, and style director Belinda Earl, the former Jaeger and Debenhams boss.
Conlumino said while M&S was "pinning its hopes on next quarter" and a step-change in the product range, there were still concerns about lacklustre stores that put off "younger and young-at-heart consumers" even though the latest collection contained some compelling offerings.
"The big issue for M&S is that while this looks good on paper, within the store environment collections lose their creative integrity and become subsumed by a sea of merchandise," the analysts said.