Marks & Spencer (M&S) had a difficult festive trading quarter, with like-for-like sales falling at both its clothing and food businesses.
The retailer blamed an unseasonably warm October for a 2.8% year-on-year decline in its general merchandise (GM) division, which includes clothing and home, over the 13 weeks to 30 December. Without the poor performance in that month, M&S says its same-store sales would have been positive for the quarter.
And its food business, which has been relied on in recent years for driving growth, saw like-for-like sales decline by 0.4%. That means its UK business saw sales fall 1.4% on a same-stores basis.
Despite this, total UK sales were up 1.1% to £2.85bn and M&S says it saw growth in both store and online sales, which were up 3% in the period.
Steve Rowe, M&S CEO explains: “M&S had a mixed quarter with better Christmas trading in both businesses going some way to offset a weak clothing market in October and ongoing underperformance in our food like-for-like sales.”
Speaking to Marketing Week on a press call this morning (11 January), Rowe added that its Christmas campaign featuring Paddington had won over customers and helped boost sales, with the Paddington bear range available in stores one of its best-selling lines.
“The campaign was brilliant. Customers loved it because it focused on a nice, fun, family aspect to Christmas,” he said. “It really set the tone for gifting and it won plenty of awards, including the number one Christmas campaign.”
This Christmas was also the first time M&S has used one campaign strapline – ‘Spend it Well’ – for both parts of the business after the launch of the strategy earlier last year. And Rowe says the message it contains about value and how people live their lives is “working well” across both.
While M&S’s like-for-like sales were down, the business performed better than expected in a difficult retail environment. While unable to match the strong performance by rivals including Next and John Lewis in its GM division, both of which have posted positive like-for-like growth, it has also avoided the sort of awful performance that led Debenhams, House of Fraser and Mothercare to issue profit warnings.
The best performing retailers over the festive season are those with the strongest omnichannel experience. And Rowe admits there is still some work to do in this area, particularly at its Castle Donington distribution centre.
We don’t want to have to discount on overpriced merchandise. If the first price is the right price then consumers will trust it.
Steve Rowe, M&S
The highly promotional retail environment also didn’t help. M&S made a conscious decision not to take part in Black Friday this year and to hold its prices in the last few days before Christmas despite a number of retailers going early on sales.
“We didn’t take part in Black Friday and we think that is the right thing to do for our price integrity,” says Rowe. “We want to hold the line on our price… but we’ve got to sharpen pricing at the same time. We don’t want to have to discount on overpriced merchandise. If the first price is the right price then consumers will trust it.”
In food, M&S’s relatively weak performance is also at odds with the rest of the grocery market, with Tesco, Morrisons and the discounters in particular seeing impressive growth. And Rowe admitted there is more to do to make M&S competitive across its offering, not just in areas where it is “special and different”.
“Where we show we are special and different and innovated strongly our performance was very good. But we have more to do on commodity prices [such as Brussels sprouts] where there is a battle on price. We have got to be sharper there.”