Marks and Spencer posts another drop in sales
Marks and Spencer posted yet another drop in sales as efforts to boost its women’s fashion range failed to deliver results.
Sales of clothing and home furnishings dropped 1.9% in the three months to end of September.
The company reported a 6.1% increase in underlying profits to £284 million. However, after accounting for one-off items the company’s pre-tax profits dropped 22.7% to £216 million. The results included almost £27 million spent on overhauling its UK retail estate million and £22 million on European store expenses.
“In the second quarter we took a decision to focus on full price sales and discount less which affected sales performance,” the company said.
In the six months to September UK like-for-like sales for M&S declined 0.4%, but food sales increased 0.2%.
The retailer also announced that in the first half of the year it closed 12 UK stores – nearly double the usual closure rate.
On a positive note, despite having problems with its website in the first half of the year the retailer said online sales increased significantly in 2015 – up 34.2 per cent in the first half.
Marc Bolland, chief executive, stressed that the drop in store sales isn’t an M&S phenomenon, adding that all of the retailer’s major rivals face the same pressure.
“This is not an M&S phenomenon, it’s an industry phenomenon,” he said.
The BBC quoted Richard Hunter, head of equities at Hargreaves Lansdown, as saying:
“The largest challenge remains in the form of sales within general merchandise, where M&S is focusing on margin improvements by eschewing discounts and concentrating on full price sales.
“This buys the company some time to rediscover the magic potion which may tempt younger shoppers into its stores.”