M&S food business buoyant as clothing sales slump

Marks & Spencer has reported a small drop in quarterly like-for-likes despite a much-publicised revamp of its clothing offer.

Like-for-like sales slipped 0.2% in the 13 weeks to 28 December. The contrasting fortunes of the two sides of the business continued, with food up 1.6% and general merchandise down 2.1%.

The autumn and winter clothing collection was the first from the new general merchandise management team led by former M&S food boss John Dixon but despite the backing of a major ad campaign featuring the likes of Helen Mirren and Tracey Emin, it failed to prevent a drop in sales.

It represents the 10th consecutive quarter that M&S has reported a fall in clothing and homeware sales.

M&S said it was hit by the unusually warm autumn and that sales did improve towards the end of the year.

“We delivered an improved performance in general merchandise over the important Christmas period, with sales up 1.5% in a highly promotional market,” said M&S CEO Marc Bolland. “However, an exceptionally unseasonal October, which saw GM sales down strongly, has resulted in a quarterly performance below our expectations.”

M&S conceded that investment in promotions – which included a pre-Christmas “Mega day” of flash clothing discounts – would hit profit margins in general merchandise. 

Food division

However, M&S increased its margin guidance for the food division, forecasting an increase in gross margins of 50 to 60 bps and said margins would be in line with last year. 

M&S said its food business benefited from the launch of 800 new products in the run-up to Christmas. The retailer said it enjoyed record results in party foods, desserts and deli.

“Our Food business had an excellent quarter, with 4.1% growth and record sales over the Christmas period, including our biggest day ever in food of £64m on the 23rd December,” said Bolland.

Other positives for M&S include the growth of its online business, which saw a 22.7% increase in sales and international. M&S said overseas sales increased 4.5%, with sales in priority markets such as India and China growing by double digits.