Marks and Spencer (M&S) has suffered another fall in sales at its general merchandise (GM) division which is primarily made up of clothing.
M&S said that like-for-like general merchandise sales fell 2.1 percent in the 13 weeks to December 28.
Marc Bolland, Chief Executive 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 GM sales down strongly, has resulted in a quarterly performance below our expectations.
“Our Food business had an excellent quarter, with 4.1% growth and record sales over the Christmas period, including our biggest day ever in food of £64m on the 23rd December.
“M&S.com also had a great quarter with sales up 23%, strongly ahead of the market. Our strategy to transform M&S into an international, multi-channel retailer, will keep on improving our .com service with the launch of our new platform and our new warehouse at full capacity.”
This has been a challenging quarter for the general merchandise market, with unseasonal conditions and higher than ever levels of discounting. Against this backdrop, M&S held its full price trading stance for much of the quarter, but as the level of promotional activity in the marketplace intensified in the run up to Christmas, it responded with a number of promotions.
M&S saw early signs of improvement in its womenswear business, with customers responding positively to its re-focus on quality and style, resulting in small market share growth in this area for the first time in three years. M&S delivered a good performance across key categories including coats, dresses and footwear, while managing stocks tightly, resulting in a clean position at the end of the quarter.
The International business continued to perform well, with strong performance across most of the countries it trades in, especially in key markets in India and China which delivered double digit growth.
M&S expects the full year gross margin in Food to be slightly ahead of the previous guidance of up 50 to 60bps. As a result of the investment in promotional activity, it now expect General Merchandise gross margin to be down 30 to 50bps. This will result in the full year UK gross margin being broadly level on last year. All other guidance remains unchanged.