Sales at Marks & Spencer’s clothing and home division fell at a slower rate in the second quarter of 2017, it reported today.
Like-for-like sales fell by 1.2 per cent, weighed down by the troubled clothing unit, a competitive market and weak consumer spending.
Marks & Spencer’s share price dropped this morning by 4.4 per cent to 325.30p in response.
M&S said this year’s later Easter and sales boosted clothing and home sales by around 0.6 %
The retail giant’s first quarter improved on the previous three months as the later Easter boosted clothing and home sales by around 0.6 per cent, while it helped lift food sales by around 0.7 per cent.
Also, reduced discounting in its clothing division and growth from Simply Food openings assisted with sales.
Chief executive Steve Rowe also said efforts to cut-back on promotions as part of his overhaul plan helped full-price clothing and home sales jump 7 per cent higher in its first quarter.
The group started its summer sale on Tuesday this week, with ‘significantly’ less stock to discount.
Rowe said: ‘Trading in the first quarter was in line with our expectations and we are on track with delivery of the plan we announced last year.’
‘I am pleased that we continue to grow full price sales in clothing & home, with reduced discounting and no clearance sale in the quarter.’
Rowe said the mood among shoppers on the high street was ‘volatile’. He said consumers are ‘very much shopping for now and cautious with their spend’.
Sales at Marks and Spencer’s clothing and home division fell at a slower rate than before in the first quarter.
The group has struggled to halt falling sales in its clothing and home division, but Rowe said the absence of a clearance sale in the first quarter knocked around 2 per cent off like-for-like figures.
M&S also axed 27 promotions in the quarter. Rowe said he hopes clothing and home sales will begin to turn positive towards the end of the year.
The group’s food sales were lower than expected and remained in the red despite surging inflation, which M&S said was running at around 2 per cent in its first quarter.
Part of the fall came as it opened Simply Food stores near existing shops, which impacted some sales, while the group also cut back on promotions.
Total like-for-like sales across all departments were 0.5 per cent lower, while it saw online sales rise 5.8 per cent at M&S.com.
Overseas sales were 4 per cent lower with currency changes stripped out as it shut 28 of 53 stores under a plan to pull out of 10 international markets to refocus on its core UK business.
Investec analyst Kate Calvert said: ‘With clothing and home in line, the concern now relates to its food business, which has under-performed the industry for the second quarter in a row.’
‘No change to forecasts, with management saying it is on track. Valuation is not compelling enough given near-term uncertainty on consumer spending and poor earnings visibility,’ she continued.
‘It is early days in Rowe’s five-year rejuvenation strategy with the benefits back-ended. Shares expected to underperform until there is evidence of a sustainable recovery. We reiterate our Sell [recommendation].’