But 3.8% decline in general sales not as bad as 6% some had predicted – buying chief Marc Bolland a few more months
Marks & Spencer has suffered its seventh consecutive quarterly fall in clothing sales but insisted on Thursday that it can do better and still has the support of its shareholders.
The firm’s chief executive, Marc Bolland, who is under pressure to improve performance at Britain’s biggest clothing retailer, said sales in the key general merchandise division fell 3.8% in the fourth quarter, while food sales rose by 4%.
Overall, underlying sales were ahead by 0.6% in the three months to the end of March, which the group said was its strongest quarterly growth in two years. The performance in general merchandise was ahead of some of the more pessimistic City forecasts, which predicted a decline of 6%, and shares in the group led the FTSE 100 risers in early trading, with a 5% jump to 403p.
Bolland’s future has been called into question at the group, which has also been subject to takeover rumours. However, presenting the results, he said: “I’m thoroughly enjoying the job and the challenge. It is a lot of hard work and it will take a long time but we expected that.”
For the year, general merchandise sales were down by 4.1% while food sales were up by 1.6%.
Bolland said: “We have always said that this quarter was a challenging one. We have very good trends out there but we can improve. We can do better than this, We are working hard at doing this and will see the first collections coming out in autumn-winter certainly with an improved line.
“We delivered an excellent result in food, with performance well ahead of the market, as customers continued to trust us for provenance and quality.”
Bolland has said that investors and shoppers must wait until the launch of M&S’s autumn-winter collection because current ranges were chosen by managers and directors he has since replaced.
James McGregor, director of consultancy Retail Remedy, said the results would buy the M&S chief a few more months. “Judgment day for Marc Bolland will come later this year. The buying decisions of the new general merchandise team cannot be assessed until autumn-winter 2013, and the success of the collections they put in store will either save the chief executive or be the final nail in his coffin.”
Analyst Clive Black said: “Given the particularly unfavourable weather for the British rag trade over the last quarter, one could argue that there has been an underlying improvement in performance in general merchandise.
“Whilst such a performance is not a reason to be putting up the bunting, it is moderately pleasing to us.”
M&S will report its annual profits in May and they are expected to fall for the second year running. In 2011, profits declined for the first time in three years, falling by 1% to £705.9m. Shore Capital is forecasting a fall to £629m for the year just ended, rising to £682m in the current year.
Bolland added that more than 50% of extra stock has been bought for key items, after a number of popular lines sold out too quickly last year.
The group’s share of the clothing and footwear market has fallen to 11.1% from 11.5% a year earlier, according to analysts at Kantar Worldpanel.
Despite the problems in general merchandise, the company’s food business has been doing well and benefitted after rivals were caught up in the horsemeat scandal.