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M&S clothing sales beat expectations but still ‘unsatisfactory’

Marks & Spencer’s general merchandise sales fell 2.7% on a like-for-like basis for the 13 weeks to March 26 compared to the same period last year, beating analysts’ expectations - but new chief executive Steve Rowe admitted the division’s performance is still “unsatisfactory”. 

M&S SS16

Overall, general merchandise sales were down 1.9% year on year.

“Although the sales decline in clothing and home was lower than last quarter, our performance remains unsatisfactory and there is still more we need to do,” said new chief executive Steve Rowe, who took over the reins from Marc Bolland on April 2.

The company said it had faced a “challenging backdrop characterised by price deflation and a flat market” during the period.

However, its general merchandise gross margin continues to increase and its full-year margin is now expected to rise by between 240 and 250 basis points.

Sales via M& were up 8.2%. Food sales grew 4% overall, while like-for-likes were flat.

Steve Rowe

Steve Rowe

New M&S chief executive Steve Rowe

Rowe said: “I am very proud and privileged to be leading M&S.  We are focused on getting even closer to our customers and putting them at the heart of everything we do.

“Turning around our clothing and home business by improving our customer offer is our number one priority.  I will update you on my thoughts on the business in May.”

M&S said its spring 16 season launched with “significantly higher product availability” than last year.

Sales of its Autograph range were up 10%.

“We also began to reduce the proportion of sales on promotional discount and will continue to do so as we head into the new financial year. However as flagged at quarter three, we had more stock into sale,” the company said.

“At the same time, we invested in sharpening our prices on a number of lines, whilst delivering a strong gross margin improvement. Although these actions contributed to the sales run rate improving since the last quarter, we still have a number of areas to address.”

The company also warned that, despite improved sales in both its franchise and owned businesses in international markets, currency pressure and challenging trading conditions are still expected to heavily impact its full year profitability.

M&S will report its full year results for the 53 weeks to April 2 on May 25.

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