Marks and Spencer sales nudge ahead

Written By Unknown on Kamis, 11 April 2013 | 15.36

11 April 2013 Last updated at 04:16 ET Continue reading the main story

Marks and Spencer sales rose slightly in the first three months of 2013, as good trading from its food business offset a fall in clothing sales.

Like-for-like UK sales were 0.6% higher for the period compared with last year.

UK food sales were 4% higher than a year ago, but general merchandising - which includes sales of clothing - was down by 3.8%.

Clothing sales have been the weak spot for Marks and Spencer in recent years, despite a raft of initiatives.

The drop in general merchandise sales was not as bad as some had forecasted, with some analysts having predicted falls of up to 6%.

M&S chief executive Mark Bolland said: "We are working hard on improving our performance in general merchandise, and despite difficult trading conditions, we made progress in our operational execution."

Clothing retailers have struggled to maintain sales recently, as the cold weather has led to shoppers holding back from buying summer clothes.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said investors were getting impatient with the company: "There has been some exasperation at the speed of the M&S revival.

"Ultimately, the company remains a work in progress. Even after the recent vague bid speculation, the shares have added just 6% over the last year, as compared to a 14% hike in the wider [100-share index]."

Food 'outstanding'

Marks and Spencer recently appointed the former Debenhams and Jaeger boss Belinda Earl to rejuvenate its womenswear range, where it still has an 11% share of the UK market.

Richard Perks, from the retail analysis company Mintel, says the results of that will not be known for some time: "It will take at least a year before she has any impact, even up to 18 months."

It has also brought in Janie Schaffer, who formerly worked at lingerie chain Victoria's Secret, to freshen up its important underwear range.

The company said its food division had been outstanding, with Easter food sales their best ever.

M&S said the growth in food sales marked three years of consecutive quarterly sales growth.

It claimed the food outlets were now the "destination of choice" for customers seeking new, quality products.

Overall sales at M&S, including its international business, were up 3.1% in the quarter, and the retailer said it had delivered its strongest quarterly sales for two years.

Earlier this year, its shares hit a 28-month high on talk it was a takeover target, although no organisation has publically said it is interested in making a move.

Tarlok Teji, retail analyst at Manchester Business School, said: "Marks and Spencer is an interesting retailer which has some fundamental issues despite group sales being up. It has pockets of excellence, such as food and undergarments.

"On a turnover of £10bn, it has a market cap of £6.1bn, whereas Next has a market cap of £6.7bn on a turnover of £3.5bn. Mr Bolland needs to make some bold moves and quickly as Marks & Spencer is currently ripe for acquisition."

The company's recent performance echoes out a report this week from the British Retail Consortium (BRC) ,which said that clothing and footwear retailers suffered a dire March, although food sales had risen thanks to the cold weather boosting the appetite for hearty meals.


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