Marks & Spencer blames warm weather and discounting for lacklustre quarter

In the 13 weeks to December 28, Marks & Spencer revealed like-for-likes fell 0.2%. Food like-for-likes jumped 1.6% but general merchandise like-for-like sales slumped 2.1%.

Group sales increased 1.8% in the quarter and jumped 3.2% over the Christmas period in the eight weeks to December 28. UK sales increased 1.5% in the quarter and 2.7% over Christmas.

Over the festive period like-for-like sales increased 1%, food like-for-likes advanced 1.5% and general merchandise like-for-like sales increased 0.5%.

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

M&S said the quarter had been “challenging” for the general merchandise market because of the “higher than ever” discounting levels. Despite this, the retailer said it held its full-price stance for much of the quarter but promoted as it got closer to Christmas which hit margins. M&S said it now expects full-year general merchandise gross margin to be down 30 to 50bps, resulting in broadly level full-year UK gross margin.

Although the warm weather impacted general merchandise sales, M&S said its womenswear business showed signs of improvement with a “good” performance across coats, dresses and footwear.

It added: “We managed stocks tightly, resulting in a clean position at the end of the quarter.” 

Bolland said the food business “had an excellent quarter” with sales up 4.1% and record Christmas turnover. It posted its biggest ever day for food on December 23, taking £64m. M&S said full-year gross margin in food is expected to be slightly ahead of previous guidance of up 50 to 60bps.

Online sales surged 23% in the quarter and M&S said orders via tablets increased more than 100% and orders via mobile surged 80%.

The retailer’s international business performed “strongly” with sales up 4.5% in the quarter. India and China delivered double-digit growth.