M&S optimistic over turnaround plan despite decline in sales

Marks & Spencer saw like-for-like sales decline in the first quarter across its clothing and food division, but revenue was boosted by a decision to cut discounts.

In the three months to 1 July, the retailer's food segment posted a 0.1% year-on-year dip in like-for-like sales, while the clothing and home division recorded a 1.2% drop compared with last year.

UK sales were down 0.5% on a like-for-like basis but rose 2.6% overall, while total group sales were 2.7% higher than in the corresponding period a year ago to £2.53bn. Growth, however, was slightly more subdued on a constant currency basis, with total sales rising 1.8%.

Group chief executive Steve Rowe said trading in the first quarter was in line with expectations and that the company remained on track with delivery of the plan it 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," he said in a trading update on Tuesday (11 July).

"In our Food business, we delivered strong growth from new Simply Food openings, and are prioritising better ranging and stronger promotions."

Rowe added full price sales were up by approximately 7% in the home and fashion division, as the retailer reduced the number of promotions and there was no clearance sale in the quarter compared with one last year.

He also announced M&S would start its summer sale today, a week later than last year and that terminal stock for the season was "significantly" down.

In May, the high street icon revealed its annual pre-tax profit had tumbled almost 64% to £176.4m in the 12 months to 1 April, as it booked £437.4m of costs after property writedowns amid plans to overhaul its empire of just under 960 UK stores and around 460 international shops.

A month earlier, the retailer had begun consultations to close six UK stores in Portsmouth, Slough, Warrington, Wokingham and two Simply Food stores in Monks Cross and Worksop.

At the time, the group also unveiled plans to withdraw from a further 53 stores in 10 loss-making international markets.

These markets consisted of ten stores in China and seven in France, as well as all of its shops in Belgium, Estonia, Hungary, Lithuania, the Netherlands, Poland, Romania and Slovakia.

The group said these countries turned in losses of £34.7m last year on sales of £179.4m, and employ around 2,100 staff.