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Bolland blames 'unprecedented' discounting for sluggish M&S sales

Marks & Spencer’s chief executive Marc Bolland has blamed poor third quarter performance on bad weather and a “highly promotional market”, but said womenwear has made small market share gains.

The retailer this morning revealed general merchandise like-for-likes for the 13 weeks to December 28 fell 2.1%, the 10th consecutive decline the arm, which is predominantly made up of clothing, has seen.

Although Christmas trading was better, GM like-for-likes only rose 0.5% for the eight weeks to December 24. Food performed better, helping the group record a total sales increase of 3.2% over the Christmas period and 1.8% for the quarter.

Speaking this morning, Bolland said October had been “exceptionally unusual and unseasonal”, which meant general merchandise sales were “down strongly”.

Bolland highlighted BRC footfall figures, showing a 4.3% decline, and Pricewaterhouse Cooper figures showing that 64% of high street retailers were on Sale in the second week of December, rising to 72% in the last week before Christmas – compared with 36% in 2012.

“On December 14 and 15, which is an important Christmas weekend, the whole market was red in terms of promotions,” he said, describing the PwC figures as “unprecedented”.  

Marks & Spencer held a flash promotion of 30% off on the last weekend before Christmas, but Bolland noted this was “at the lower end of the market”.

However as a result of discounting, margins were down 30-50bps,although overall group margins are flat. Stock was managed tightly however.

Bolland added: “This was not an easy Christmas, we have all seen what happened with the month of October and with the very unusual promotional start in November and December, but we have stabilised market share, and in womenswear we rose 10 basis points, which is our first positive sign.”

Online growth – which in general merchandise was up 32% - came despite the business still using an old platform and its new ecommerce distribution centre at Castle Donington not being at full capacity.

During Christmas Bolland said ecommerce represented 16% of sales, and M&S is now the third biggest clothing etailer after Next and Shop Direct – the second of which is now in his sights.

 “We are now at 7.2% of the market and Shop Direct is 7.7%, but they haven’t grown that much. With the new platform and distribution centre I think we will be more competitive and perhaps in the next 12 months we could breeze through.”  

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