M&S performance improves but profits still down
Marks & Spencer has reported a fall in profits despite an improvement in sales performance in its second quarter results.
Total group sales increased 2.5 per cent during the second quarter, an improvement on the 0.7 per cent decline in quarter one. UK sales were flat during the period, following a 2.8 per cent decline in Q1.
General merchandise sales, which includes clothing, fell 1.8 per cent like for like in the second quarter – an improvement on poor clothing sales in Q1 when they fell 6.8 per cent like for like.
M&S says running “selective” promotions in clothing helped offer shoppers good value. Analysts attribute the improvement to a strong autumn marketing push and improved store environments, but say it still has issues to resolve.
Food sales increased 1.6 per cent like for like after a 0.6 per cent rise in Q1.
Pre-tax profit fell 9 per cent to £290m in the half year to 29 September, down from £321m a year ago.
Despite the improvement in sales, chief executive Marc Bolland expressed some disappointment in performance. He says “unseasonable” weather hit sales and claims that while the Jubilee and Olympic celebrations improved the customer mood, it did not translate into a sales uplift.
Chief executive Marc Bolland says: “We are pleased to report a better performance across the business in the second quarter. We took steps to address the short term merchandising issues in general merchandise and as a result, we delivered an improved performance.
“Recent trading has been volatile. This, coupled with continuing pressure on consumers’ disposable incomes, makes us cautious about the outlook for the rest of this year. However, we are well set up for the Christmas trading period.”
He adds that the retailer is prepared for Christmas with “better than ever” products. M&S unveiled its Christmas advertising campaign yesterday (5 November).
Bolland also says that M&S is making “strong progress” with is strategy to transform into an international multichannel retailer.
International sales increased 3.6 per cent and the retailer revealed the launch of four local market online operations last month.
Multichannel sales increased 17 per cent during the period and 43 per cent of all multichannel sales are now collected in-store thanks to the extension of its ‘Shop Your Way’ service.
Its revamped stores are performing 2.6 per cent ahead of the rest of the stores with the new home departments showing “encouraging” sales.
It has launched its new beauty shop in 28 stores and is reporting double digit sales uplifts
Meanwhile, M&S has appointed Victoria’s Secret chief creative officer Janie Schaffer to head up its beauty and lingerie department, a division that is expected to grow significantly following the introduction of its new beauty department in 28 stores.
Former director of lingerie and beauty Frances Russell has been promoted to director of womenswear. Both report to executive director John Dixon.
The appointments complete the recently restructured senior general management team. They will work alongside Belinda Earl who joined as style director in September, Stephanie Chen head of kids and home team and Scott Fyfe who becomes director of menswear in December.
The news comes as the BRC reports the worst sales growth in 11 months.
Kantar Worldpanel is due to report the latest supermarket figures later today.
