Like-for-like clothing and home sales at Marks & Spencer will be back in growth before the end of the financial year, chief executive Steve Rowe said today.
He predicted that this division of M&S would report positive like-for-likes by the fourth quarter, which ends in March next year, as the retailer settles into its strategy of reducing discounting. It comes after M&S this morning reported a 1.2% fall in clothing and home like-for-likes for the 13 weeks to 1 July.
Total clothing and home sales fell 0.5% to £852.1m, despite an estimated 0.6% uplift thanks to the later timing of Easter.
Rowe explained that like-for-likes had suffered during the quarter after the business stripped out 27 promotions and moved back the start of its clearance Sale to today (11 July). He said this effectively meant sales were down 2% on what they should have been.
However, he defended the strategy, pointing out that full-price sales in clothing and home rose 7% in the first quarter. End-of-season stock overhang was down 17% on last year.
“We removed one Sale this quarter and there is another Sale in August that we won’t be doing, and we have one big promotion to cut from the next quarter. In the third quarter we should see [improved] like-for-like conditions,” he said.
“We’re expecting the trajectory of full-price sales to continue and, all being equal in terms of environment, we expect to be positive by the end of the year.”
Rowe observed that discounting had increased in the wider sector: “Towards the end of May and beginning of June the market was more promotional than last year and the end-of-season Sales started earlier. It was volatile out there.”
He also warned that consumer confidence was “volatile” and would remain uncertain for the foreseeable future.
“We’ve been seeing consumer confidence dip in the last few weeks as they are feeling less positive and robust about the economy. The consumer is shopping for now and are being cautious with spend.”
However, the chief executive remained confident: “We are delighted with where we are on clothing and home. On full-price sales the indicators are good the trend for higher market share is continuing. The reactions to our price structuring, availability, and the layouts for our large stores are all good.
“We’re on track but there’s more to do on clothing. We’re not being complacent as we need to see more improvement but we’re relaxed about where we are as it’s where we planned it to be.”
Rowe’s firm stance on discounting is to be applauded as constant promotions erode not only margins but brand integrity. However, the high street stalwart needs to start showing gains in its all-important clothing like-for-like sales.
The fact that clothing remains in negative territory - despite a later Easter benefiting the retailer’s first quarter compared to the same period in 2016 - is worrying. Rowe has made some headway with his strategy for the clothing arm but the slow results beg the question of whether the changes go far enough in clarifying the retailer’s core consumer, improving the product offer and ultimately reducing retail losses.
In today’s turbulent economy where consumer confidence is shaky and shoppers are spending less on clothing in favour of leisure, M&S needs to ensure its stores are engaging and providing shoppers with a great experience, as well as focusing on offering quality product suited to its core customer base.
When Halford’s boss Jill McDonald joins in the new role of managing director for clothing, home and beauty she will undoubtedly be under pressure to make those fashion figures positive first and foremost.