Marks & Spencer said it is rapidly pushing ahead with its turnaround plan after half-year sales slumped during a “challenging” period for its clothing and homeware business.
The high street stalwart saw overall sales fall 2.1 per cent to £4.86 billion for the six months to 28 September.
The firm hailed the performance of its food business, which grew sales, but saw clothing and home sales slid on the back of buying and supply chain issues.
Clothing and homeware plunged 7.8 per cent as like-for-like sales dropped 5.5 per cent on the back of issues around product availability.
M&S said it had “poor availability on the most popular sizes and too much stock and markdown” on its clothing lines. It added that it saw a sales uplift in October after taking action to improve availability and has had an “encouraging” relaunch of its Per Una sub-brand.
The group also reported weaker-than-expected online sales, as digital revenues rose just 0.2 per cent despite an 8 per cent increase in website traffic.
Meanwhile, like-for-like food sales increased by 0.9 per cent driven by an acceleration in the second quarter.
The company said it has benefited from price reductions on a range of core food products and almost halved its number of promotions. Nevertheless, this was not enough to stem falling profitability, as trading profits slid 17 per cent to £176.5m during the half-year.
M&S said it has closed 17 stores as part of its turnaround plan which it confirmed will see the closure of 100 stores across the UK. It said it made £75m in cost savings during the period as a result.
The group also reduced its dividend by 40 per cent to 3.9p, as it had previously indicated would happen as a result of the transformation programme.
Chief executive Steve Rowe told investors: “Our transformation plan is now running at a pace and scale not seen before at Marks & Spencer. For the first time we are beginning to see the potential from the far-reaching changes we are making.”
During the period, M&S also completed its £750m joint venture deal with Ocado Retail and said plans for M&S supply have been “progressing well”.
There was a positive market reaction to the results, with shares in the retailer up almost 5 per cent in early trading.
Arlene Ewing, investment manager at wealth management firm Brewin Dolphin, noted: “Trading continues to be challenging for Marks & Spencer: revenues are in decline, earnings per share have fallen, and profit before tax is down.
“The positive, though, remains the food business, which delivered like-for-like sales growth. The deal with Ocado also appears to be on track, which could make a significant difference to Marks & Spencer’s food offering when it is fully in place. However, there is still a lot of work to be done to transform one of the UK’s most iconic brands – especially at its struggling divisions.”
Richard Hunter, head of markets at Interactive Investor, said: “The company has at least moved from ‘on your Marks’ to ‘Get set’, but the next stage remains some way off in restoring the brand to its former glories.
“As such, the market consensus of the shares as a ‘sell’ is likely to remain in place for the time being.”