Marks & Spencer’s turnaround in doubt as food sales see surprise drop
A SURPRISE drop in underlying food sales cast a shadow over Marks & Spencer’s turnaround yesterday despite improved trading in its troubled clothing and homewares business.
Marks & Spencer’s underlying food sales fell casting doubt on their turnaround
Shares in the retail giant fell 15p to 323p as investors digested a shock 0.1 per cent fall in same-store food sales over the 13 weeks to July 1, compared with analysts’ expectations for 0.6 per cent growth.
Overall food sales were up by 4.5 per cent to £1.4billion as new Simply Food outlets outperformed expectations.
Marks is switching some of its UK shop floor space from clothing to food and chief executive Steve Rowe said it continues to win market share.
Clothing and home total sales fell 0.5 per cent to £852.1million or 1.2 per cent on a like-for-like basis, compared with a decline of 5.9 per cent over the previous three months.
Rowe has focused on reducing the number of promotions in favour of lower prices since taking charge in April last year, while improving availability and service levels.
Full-price clothing and homeware sales rose 7 per cent in the first quarter reflecting 27 fewer promotions compared with the previous year and no clearance sale.
Marks & Spencer dessert developers on Bake Off - Creme de la Crème
Shares in Marks & Spencer fell 15p after the 0.1 per cent fall
I’m delighted with where we are
Rowe said: “We have a plan and we remain convinced it is the right one. I’m delighted with where we are. We’re absolutely on track with the delivery of the plan we announced last year.
“We’ve gained full price market share, volume market share and market share in stores.
“In our food business, we delivered strong growth from new Simply Food openings and are prioritising better ranging and stronger promotions.”
New Simply Food stores outperformed expectations
Peel Hunt analyst Jonathan Pritchard described the food performance as “puzzlingly disappointing”.
He added: “All the external conditions should have been favourable but the food showing is not a good one. It’s a little unnerving that management is flagging the need to improve its ranges. We thought they were on the money.”
Shore Capital’s Clive Black said the trading update confirmed the restructuring “could be a reasonably long and arduous one”.