M&S has this morning issued a shock profit warning as it announced that its director of food Steve Esom has left the business.
In its first quarter trading statement, which has been released a week early, M&S’s like-for-like sales in the UK fell 5.3 per cent in the 13 weeks to June 28. General merchandise was the worst performing sector, plummeting 6.2 per cent on a like-for-like basis, but food sales fell 4.5 per cent, despite inflation.
M&S director of home John Dixon will replace Esom as director of food and remain a member of the executive committee.
In a statement, M&S chief executive and chairman Sir Stuart Rose said: “At our preliminary results in May we reported a mixed start to our 2008/2009 financial year and expressed caution about consumer sentiment. Since then, consumer confidence levels have deteriorated markedly and market conditions have become more challenging.
Rose added: “In this quarter, pressures on consumer spending and increased competitor pricing and promotional activity, coupled with changes in consumer buying patterns, have resulted in a significantly weaker performance.“
Group sales for the period rose 1.3 per cent and international sales soared 24.5 per cent.
Pali International analyst Nick Bubb said: “It is very disappointing that clothing is doing even worse than food so it seems a tad harsh that is the MD of the food division has been sacked. The reasoning is that M&S is holding market share in clothing, but losing market share in food?”
Bubb added: “Given the operational gearing of the business, this kind of sales run-rate would knock at least£50 million off full-year profits, even though gross margins are ok, so we are coming down from£850 million PBT to£800 million (36.5p) at best.”
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