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Updated: Marks & Spencer's clothing sales dive as it shakes up promotional calendar

Marks & Spencer’s clothing and homewares sales fell by 8.3% year on year in the first quarter of 2016 after it pushed its summer Sale back by two weeks and reduced its promotional activity. Like-for-likes were down 8.9%.

Marks & Spencer autumn 16

Marks & Spencer autumn 16

The retailer pointed out that its summer Sale began on July 5, two weeks later than last year, and it only held one “cyber day” promotion compared to six during the same period in 2015. As a result, online sales crept up by just 0.5% year on year.

It has repriced around 1,000 lines since January, and said it has seen “strong sales growth” across these items.

However, it was also faced with weakening consumer confidence in the run-up to the EU referendum, as well as challenging market conditions generally.

Total food sales were up 4% for the 13 weeks to July 2, but down 0.9% on a like-for-like basis. The retailer said the timing of Easter, which fell on March 27 this year, led to a tougher year-on-year comparison.

UK sales were down 4.3%. However, international sales were up 0.7% on a constant currency basis and up 6.1% on a reported basis.

Overall, group sales fell by 0.4% on a reported basis and 0.9% on a constant currency basis*.

Chief executive Steve Rowe said: “A key part of our recovery plan for clothing and home is lowering prices and reducing promotions. As a result, we ran fewer price promotions while continuing to lower prices to deliver real value to our customers, and moved the summer sale to July.

“We knew our actions would reduce total sales but we are seeing some encouraging early signs. Our food business continues to strongly outperform a deflationary market, with like-for-like sales slightly down when adjusted for Easter timing.

“As highlighted in May, consumer confidence weakened in the run up to the EU referendum. While it is too early to quantify the implications of Brexit, we are confident that our strategic priorities and the actions we are taking remain the right ones to deliver results for our customers and our business.”

M&S said its full-year guidance remains unchanged. Its interim results will be released in November.

James McGregor, partner at consultancy Retail Remedy, said: ”Rowe’s first full quarter in charge of M&S has been challenging to say the least but deep Sale discounts have now kicked in clearing a path for autumn/winter. This stock has already been bought so the only way to make a significant change in the next season’s and quarter’s fortunes is through price.

“Rowe warned of margin impact from price cuts but the trade off needs to be in higher volumes. Price alone is not enough to attract back the promiscuous customer that has forgotten to look beyond the food hall.”

*The figure originally given for group sales was incorrect. Marks & Spencer has amended it from a rise of 1.3% on a reported basis to a fall of 0.4%. 

 

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