PRIMARK turned up the pressure on Marks & Spencer boss Marc Bolland with a sparkling performance that outshone its older rival.
M&S, which launched its latest multi-million pound advertising campaign this week, announced its ninth consecutive quarterly fall in non-food sales and a fall in profits, while Primark unveiled a 22 per cent rise in annual revenue.
The contrasting fortunes of the two firms comes as M&S opposes Primark’s bid for permission for a store close to its flagship outlet at the Gyle in Edinburgh.
M&S chief executive Bolland, three years into his turnaround programme, insists the group is making headway and a slower rate of decline in its key womenswear division was seen as a positive by some analysts. The shares topped the FTSE 100 index as an indication that investors believe he may be getting it right.
Like-for-like sales in general merchandise, which includes clothing, fell 1.6 per cent in the first financial quarter but slowed to a 1.3 per cent fall in the second three months to 26 September.
Bolland said the period only included three weeks trading after the new advertising campaign for the crucial autumn/winter womenswear collection, featuring celebrities such as Dame Helen Mirren.
He said the collection had been “universally well-received by the fashion press”, and the early signs of improvement were encouraging.
He declined to forecast when its flagship womenswear business would be in same-floorspace growth again. “We are looking for a gradual improvement. We have not given ourselves a timeline,” he said.
Total group sales rose 3.6 per cent to £4.9 billion, but underlying six-monthly pre-tax profits fell from £287.3 million to £261.6m.
Primark revealed that like-for-like sales for its cheaper, fast fashion products rose 5 per cent in the year to mid-September, while its total sales, including new floorspace, jumped 22 per cent to £4.3bn.
Neil Shah, a retail analyst at Edison Investment Research, said: “Consumers are still being hit hard on their discretionary spend which is why Primark is benefiting.
“Primark has given M&S a harsh lesson in the need to be faster at adopting fashion trends if a large clothing retailer is to take market share.”
James McGregor, director of consultants Retail Remedy, said: “The walls are closing in on Marc Bolland, although in fairness the unseasonably warm weather hasn’t helped.”
It was yet again a much stronger picture at M&S’s food operation. The rise in like-for-like food sales accelerated from 1.8 per cent in Q1 to 3.2 per cent in Q2. Overseas, the company continued to face headwinds in the likes of Ireland and Greece, but overall sales were up 8 per cent, with good performances in India and China.
Online sales were up 28.5 per cent, outperforming the general market growth figure of 16 per cent put out by the British Retail Consortium.
M&S’s interim dividend is held at 6.2p, while investors have hopes of better returns from next year when annual capital expenditure drops from £775m to what M&S calls a “more sustainable” £550m. The shares closed up 21.9p or 4.5 per cent at 509p.