Chief executive Marc Bolland — who has been under
pressure to turn around clothing sales — defended his “step-by-step”
strategy and said shareholders and the board were backing him. Splitting
clothing off from the whole of general merchandise for the first time,
M&S said like-for-like sales for the division rose 0.6% in the 13
weeks to the end of March.
“This is a step-by-step
improvement,” said Bolland, who recently unveiled the second Leading
Ladies advertising campaign for its womenswear. The ads show such
luminaries as singer Annie Lennox, actress Emma Thompson and campaigner
Baroness Lawrence, photographed by Annie Leibovitz.
He
added: “We have improved and increased the style and trend credentials
and the higher-quality products are selling well.” However, its
homewares division dragged down general merchandise where like-for-like
sales were off 0.6%.
There were also concerns that
M&S has been heavily discounting in order to shift its wares in an
ever more competitive High Street and online retail market. Bolland, who
has been at the retailer for nearly four years, said it “didn’t buy
sales with promotions” but admitted it had to increase its discounting
to keep up with rivals. This meant its group margins will be hit and it
warned UK gross margin for the full year will be down by about 20 basis
points.
Shares in M&S jumped more than 3% in early trading today, but quickly dropped back to 451.9p — a fall on the day of 4.1p.
Sales at its food division were up 0.1% — the 18th straight quarter of growth — and group sales ticked up 1.9%.
“Our food business had another great quarter, especially considering the later timing of Easter,” said Bolland.
“We continued to outperform the market with record sales around key events including Valentine’s Day and Mother’s Day.”
A
newly relaunched website has prompted an increase in traffic, M&S
said, and it will step up marketing of its website next month.
The
company will reveal its full-year results — expected to produce pre-tax
profit of between £615 million and £620 million — in May.
Clive
Black at Shore Capital said: “The heartbeat of the retailer is apparel —
and ladieswear at that — and M&S needs to deliver stronger trade.
Despite distinctly dull trade, we do see progress in the proposition,
its merchandising and execution. But there is clearly a lot more to do
for M&S to stem market share decline in ladieswear in the UK on a
sustained basis.”
Neil Saunders, managing director
consultant Conlumino, said: “Without more radical change the latest
results could prove to be cough and splutter rather than the sound of an
engine being finely tuned to deliver a winning performance.”
