Sales of Marks & Spencer clothes and food fell in the last quarter of 2017, denting the British retailer’s latest attempt at a corporate turnaround and knocking its shares.
Once a British institution, M&S is facing fierce competition online and on the high street, with its efforts to revitalise its 134-year-old business hampered by a squeeze on consumer spending as inflation rises in Britain and wage growth falters.
By contrast, British online fashion retailer Boohoo.com raised its full-year sales forecast after more than doubling its revenue over the same period to the end of December, with strong Black Friday sales.
Shares in M&S, which rallied in the week before its Christmas update, fell as much as six per cent yesterday after it said sales of clothing, domestic products and food had all fallen, albeit not by as much as most analysts had forecast.
“We had a mixed quarter that started off with a challenging October but got better on both sides of the business in the run-up to Christmas,” M&S chief executive Steve Rowe said, adding that it “had a lot to do” to get its food business on track.
Although Next, a rival in clothing, also reported better-than-expected Christmas sales last week, M&S is not the only British retailer to have struggled in the crucial period.
British department store John Lewis said yesterday that its own trading was likely to remain volatile in 2018 after higher costs and tough competition blunted the benefits of solid Christmas sales.
And Tesco, Britain’s biggest retailer, missed forecasts for Christmas trading.
M&S reset its strategy in November two months after retail veteran Archie Norman joined as chairman, saying it would speed up store closures and relocations and reposition its food offer, including slowing down openings of its Simply Food convenience stores.
Yesterday, M&S said same store food sales fell 0.4 per cent. While this was better than analysts’ average forecast of a 1.1 per cent decline, it was worse than a 0.1 per cent fall in the previous quarter.
M&S said like-for-like sales of clothing and homeware fell by 2.8 per cent in its fiscal third quarter, which was ahead of analysts’ average forecast of a 3.4 per cent decline. The fall in the second quarter was 0.1 per cent.
“While we expect 2018 to finally see some genuine signs of a turnaround in M&S’s womenswear business, the trading over Christmas was disappointing,” Bryan Roberts, global insight director at TCC Global, said.