2012/13 half year operating review:
The market continued to be challenging through the first half of the financial year, with consumer confidence impacted by a weak macro-economic situation and continued pressure on disposable incomes. Trading was volatile, affected by unseasonable weather conditions over the summer months, including three of the wettest months on record in April, June and July. While the Jubilee and the Olympics improved the nation’s mood, they did not translate into higher sales.
Against this backdrop we focused on tight management of margin and costs. We took action to address the short term issues in General Merchandise and are pleased that we have seen an improvement in the second quarter. At the same time we continued to invest for the long term, in line with our strategy to transform the business into an International, Multi-channel retailer.
Group sales were up 0.9% on a constant currency basis (+0.4% actual currency) in the first half driven by good performance in our Food, International and Multi-channel businesses.
General Merchandise sales were down 2.5% with like-for-like sales down 4.3%. At the start of the financial year we identified merchandising issues in our Spring/Summer clothing collections, which impacted performance in the first quarter. We took decisive action, bringing our stock levels back in line for the Autumn/Winter season, improving our merchandising processes and better aligning our buying and external marketing. As a result, we have delivered an improved performance in General Merchandise in the second quarter.
In July we announced changes to the General Merchandise management team. Following the departure of Kate Bostock, John Dixon was appointed as Executive Director for General Merchandise from 1 October 2012. We have also strengthened the team with a number of key appointments, including Belinda Earl, who has joined as Style Director. Yesterday we announced further changes to our General Merchandise Management Team. Frances Russell has been appointed Trading Director in Womenswear, following a successful tenure running our Lingerie and Beauty business. Janie Schaffer is joining the business as Trading Director of Lingerie and Beauty and will start her new role in early 2013.
The new team is now in place, and focused on delivering improvements for our customers in both product, and operational execution. These improvements will take time to come through, but our customers will see the benefits of the changes from next summer.
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