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M&S: Analyst reaction

Analysts were unsurprised by Marks & Spencer’s latest results announced today (July 8) however have reaffirmed that all eyes will be on the performance of the retailer’s autumn 13 range.

It announced total UK sales rose 2.7% as general merchandise sales increased by 0.5%. However, on a like-for-like basis general merchandise revenues slipped 1.6%. Total group sales rose 3.3% in its first quarter, with online sales climbing 29.9%, benefiting from a 160% rise in sales from mobiles and tablets. 

International sales surged 8.7% during the quarter, with M&S flagging up its key markets of India, China and the Middle East.

Tristan Rogers, chief executive of international retail advisors Concrete Platform, said: “The ongoing focus on UK general merchandise sales at M&S by the City analysts has become almost fetishistic. Whilst it may have been a ‘bedrock’ for M&S in the past, I think it is worth considering whether it is indeed the formula for the future. A department store that sells clothes and home wares to kids, mums and grandparents is a format from 1950s, and whilst it is not a dead format, it is one that is withering.

“With increasing exposure to new international markets, M&S will gain valuable insight into different market dynamics and create a spread bet against a changing UK market. All in all, I think the growth areas in the business are by far the more indicative signs of long term health than a flat lining UK general merchandise business.”

James McGregor, director of retail consultants Retail Remedy, added: “With strong food and still struggling general merchandise, these numbers were pretty much what was expected. In fairness, the general merchandise figure isn’t that bad given market conditions and M&S may even have outperformed certain other retailers. M&S should take heart from the fact that its online channel is doing so well.

“The future for M&S is the digital and not the twinset generation. The new online platform launching next year will only strengthen this channel. It’s now all about the Autumn/Winter range. A huge amount is riding on the new range and its main challenge is to satisfy both the retailer’s traditional and younger customers.”

Independent retail analyst Nick Bubb emphasised the focus placed on the upcoming performance of the autumn clothing range.  

He said: “We warned yesterday that, with all eyes fixed on the much-vaunted autumn fashion range, today’s Q1 sales figures from M&S wouldn’t advance the debate much, with the figures emerging very much as expected. With summer only just getting underway, it is a shock to hear that the first autumn lines will start arriving in the stores on July 25, although the main advertising push will not take place until September.”

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