High street stalwart Marks & Spencer has warned of a volatile retail backdrop after delivering mixed results for its latest quarter.
Bosses yesterday insisted that their overhaul remains “on track” after the sharp decline in clothing sales seen in the previous period was arrested.
We are satisfied we are on track and that our plan to grow M&S is the right oneSteve Rowe
However, shares came under pressure after retail experts raised concerns over an unexpected dip in food sales.
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Chief executive Steve Rowe said sales at the clothing and home division were moving in the “right direction” with the 1.2 per cent decline over the 13 weeks to 1 July marking an improvement on the 5.9 per cent slide seen in the previous three months.
The timing of Easter helped narrow sales falls, but the group’s decision to axe a raft of promotions and clearance sales had an impact.
Food sales slipped 0.1 per cent. While that was better than the 2.1 per cent fall seen in the previous quarter, it dashed expectations for a sales rise and came despite a boost from Easter and rising food inflation.
M&S said this year’s later Easter flattered clothing and home sales by around 0.6 per cent, while it helped lift food sales by around 0.7 per cent.
Rowe told investors the firm was “seeing the results of our plan in action” as efforts to cut back on promotions helped full-price clothing and home sales jump 7 per cent higher in its first quarter.
He also said part of the fall in food sales came as it opened Simply Food stores near existing shops, which affected some sales, while the group also cut back on promotions.
He said: “We know there’s a lot more to do, but in the context of the market, we are satisfied we are on track and that our plan to grow M&S is the right one.”
But Rowe warned that the mood among shoppers on the high street was volatile, with consumers “very much shopping for now and cautious with their spend”.
Laith Khalaf, senior analyst at Hargreaves Lansdown, branded the first quarter food sales fall a disappointment.
He noted: “[Total] M&S food sales continue to rise, driven by its store expansion programme, and with around 200 new outlets to be opened by 2019, this should continue to add pounds and pennies to the bottom line. The continued fall in like-for-like sales at existing stores is a disappointment however.
“Overall conditions for high street retailers remain pretty grim, with consumer purses under pressure and competition coming from all angles. M&S is swimming quite hard against this tide, so it deserves some credit for treading water.”
Outgoing M&S chairman Robert Swannell told investors the group’s overhaul would cause inevitable “short-term pain”. In his last AGM before handing over the reins to former Asda chief Archie Norman, he said the overhaul was necessary and that M&S needed to end the “damaging cycle of promotions and sales”.