Marks and Spencer sees sales fall again – BBC News

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Image copyright M&S

Sales at Marks and Spencer have fallen for the six months to 26 September.

UK like-for-like sales fell by 0.4% for the period. General merchandise, which includes the clothing division, were down by 1.2%.

Food sales rose by just 0.2%. Both figures were in line with analysts’ expectations.

The retailer said underlying profits rose by 6.1% to 284m, although after taking into account one-off items pre-tax profits fell 22.7% to 216m.

Those items included almost 27m on revamping UK stores and 22m on European store costs.

M&S said that trading conditions were challenging, with the UK retail sector affected by unseasonal conditions that resulted in high levels of promotions, particularly in the first quarter.

“In the second quarter we took a decision to focus on full price sales and discount less which affected sales performance,” the company added.

M&S said profit margins at its non-food business had risen by 2.85 percentage points. Given the strong competition from other retailers, chief executive Marc Bolland has focused on improving margins and selling fewer items on promotion rather than trying to boost volumes.

International sales fell 0.9% excluding currency movements, or 5.1% in real terms. Performance in Europe was affected as M&S absorbed higher costs rather than raise prices.


Analysis: Kamal Ahmed, BBC business editor

Underlying profits up, profit margins up and womenswear sales down.

That is the continuing story of M&S and try as he might, Marc Bolland simply cannot get those key womenswear sales to move in a positive direction.

He has decided – making a virtue of a necessity – investors are more interested in how much money M&S makes from each sale rather than the overall volume of sales.

Every quarter, M&S trumpets its ever-increasing gross margin figure – arguing that fewer promotions means more full price sales and increased cash flow.

Food sales, in a brutally competitive and largely falling market, are up slightly.

In the past year, M&S’s share price has risen by 29%. Little wonder Mr Bolland has said he is staying for at least two more years.


Read more: www.bbc.com

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