Marks & Spencer reports 0.7 per cent fall in UK sales

Retailer hit by stock shortages in womenswear.

M&S's head office in London. Credit: Getty Images

The British clothing, home products and food retailer Marks & Spencer Group (M&S) reported today a fall of 0.7 per cent in like-for-like sales for the fourth quarter ended 31 March 2012. 

The group’s chief executive, Marc Bolland, admitted that a failure to order enough women’s cardigans, jumpers and shoes negatively affected the results. “That was a miss,” he said.

Nevertheless, group sales and total UK sales improved by 0.8 per cent and 1.2 per cent respectively during the quarter.

Bolland said: “Our food business has again performed well, especially in healthy food, while the general merchandise performance was more mixed.”

International sales declined 2 per cent. The company’s newly opened flagship store in Paris performed well but global sales were affected by continued weakness in the Republic of Ireland and Greece, as well as the restructuring of the central European business. According to Bolland: “Strategic international markets, including India and China, delivered double-digit growth but we continue to experience macro-economic pressure and restructuring in some parts of Europe.”

In food, the company introduced around 500 new products during the quarter. In clothing, menswear, lingerie and children’s clothes delivered strong results. The company also improved sales performance in home business in kitchens, bedrooms and bathrooms.

Sales through M&S Direct increased by 22.8 per cent as the company launched a number of new initiatives aimed at improving our customers’ shopping experience, including the M&S Outlet on-line store.

Performance of the company’s pilot stores in the UK was satisfactory as customers responded favourably to the improvements.

For the fiscal year 2012-2013, the company expects the gross margin to increase from 0 to 25bps, operating costs to increase from 3 to 5 per cent, group capital expenditure to be around £825m, the effective tax rate to be 24 per cent and pension finance income (non-cash) to be approximately £10m lower than in 2011.

“We have continued to manage costs tightly and are confident of delivering full-year profits in line with expectations. While the short-term trading outlook continues to be challenging, we are focused on investing in line with our plan and are making strong progress against our goal of becoming an international, multi-channel retailer,” concluded Bolland.