Sales of both clothing and food were down at Marks & Spencer in the third quarter of 2018 which the retailer has blamed on a combination of low consumer confidence, mild weather, Black Friday and widespread discounting by rivals.
For the 13 weeks to 29 December, like-for-like food sales were down 2.1% and clothing & home sales down 2.4%, resulting in overall group revenue falling 3.9% to £3bn.
However, M&S claims its product-focused Christmas campaign – which the retailer’s director of marketing for clothing & home Nathan Ansell said it decided to take an “unashamedly commercial approach” on – worked well, with record sales across all advertised lines.
Marks & Spencer has no plans to return to blockbuster advertising this year, with the focus remaining on product and sales rather than brand.
During a press call this morning (10 January), chief executive Steve Rowe said M&S had “held its nerve in a very competitive market” and the business can see “early signs of encouragement” that it is on the right track to ensure the business has a long-term future. However, he said he “didn’t want to call it” on how long it might take to return to positive growth.
The decline in clothing & home reflected lower footfall to stores, partly as a result of the increasing pace of closures. M&S also decided not to take part in Black Friday this year – something Rowe maintains was the “right thing to do” and despite John Lewis recording its biggest ever sales week in the period.
It also reduced promotional activity in December by 37% and put 25% less stock into the sale, making it the smallest Christmas sale M&S has had in a number of years.
UK online sales grew above the market average and was up by 14%, which boss Steve Rowe said highlights the need to accelerate its store closure programme and shows it is on track to move a third of its business online within the next three to five years.
Rowe said Holly Willoughby has also helped to attract a younger audience to its clothing & home business with the ‘Must Haves’ ad campaign and range. Womenswear online growth “significantly outperformed,” he added.
Within food, where deflation was 2%, M&S said customers responded well to its Christmas ranges and campaign, resulting in “solid volume growth” over the Christmas period with the majority of stores delivering like-for-like revenue growth.
Bryan Roberts, global insights director at tcc global, says the “disappointing” set of numbers signals that the turnarounds in both general merchandise and food have a way to go.
“We have been heartened by some of the self-help measures M&S has put in place for food, such as simplifying the range and promotional structures, and seeking to reduce base pricing,” he says.
“However, there must be a degree of concern that many competitors have at least partially closed the gap in terms of innovation and premium private label.”
M&S will continue to cut prices across food and clothing & home until the Spring.