M&S bitten by frost as stock shortages catch it on the hop

M&S chief executive Marc Bolland said the group ran out of stock in some best-selling lines of womenswear, particularly knitwear and outerwear, and key brands such as Autograph.

“In February we sold 100,000 items [of knitwear]. We could have sold 300,000 as February was extremely cold,” Bolland said. “We were also very short on jackets and outerwear. We could have sold 20,000 extra items in terms of outerwear.”

M&S said in its trading update that like-for-like UK sales were down 0.7 per cent compared with City consensus expectations of a 0.8 per cent rise and a third-quarter sales increase of 0.5 per cent.

A 1 per cent rise in same-floorspace food sales was overshadowed by a 2.8 per cent decline in general merchandise, which includes homewares and clothing. M&S shares closed down 2 per cent or 9p at 358.7p.

Bolland said the main reason for the general merchandise sales fall was M&S’s decision to pull out of the technology sector, leading to a 9 per cent decline in home sales. Clothing, he said, was down “less than 2 per cent”.

He said he retained full confidence in M&S’s merchandising team under Kate Bostock despite the stock problems, which he said would be resolved by “buying deeper” and better co-operation between departments.

“This is not a major issue, let’s not make it bigger than it is. The team is on top of it,” he added.

M&S, which posts its annual results on 22 May, said that within clothing there were strong performances in menswear, lingerie and kidswear.

Food’s positive performance was partly due to “healthy eating” products under the Simply Fuller Longer brand, the group said. M&S said it was market leader in this food segment, with a 33 per cent slice.

The M&S Direct online business lifted sales 22.8 per cent. In its 2010-11 financial year M&S had online sales of £543m, 5 per cent of group sales of £9.7 billion. The company has said it is targeting between £800m and £1bn of M&S Direct sales by 201314.

The international division saw a 2 per cent sales fall, as double-digit growth in India and China was outweighed by continued pressures in Ireland and Greece, and the restructuring of its central European business.

Despite the headwinds, Bolland said the company planned to open overseas outlets at the rate of one a week over the coming year.

He said there had been a good customer response to M&S’s new pilot stores and that its target date of mid 2013 for completion of the rollout across the group was unchanged.

The company revealed the cost of the major store revamp would be £100m less, at £500m, than had been previously earmarked because it was making speedier progress than expected.

M&S said its gross profit margin in 2012-13 would be up to 0.25 per cent higher.