Marks & Spencer share price: United Kingdom sales dip in Q1

Posted July 12, 2017

Group like-for-like sales fell by 0.5% and chief executive Steve Rowe said trading was in line with expectations.

The group's food sales were lower than expected and remained in the red despite surging inflation, which M&S said was running at around 2% in its first quarter.

In the three months to 1 July, the retailer's food segment posted a 0.1% year-on-year dip in like-for-like sales, while the clothing and home division recorded a 1.2% drop compared with last year. Full-price clothing sales rose about 7 per cent in the quarter, the company said.

A disappointing drop in food and drink sales at Marks & Spencer has put a dampener on CEO Steven Rowe's recovery plan for the retailer. Underlying food sales had also declined 2.1% in the previous quarter.

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Same-store sales in the clothing and home division fell 1.2 per cent in the 13 weeks ending on July 1st, London-based MandS said on Tuesday, having slumped by nearly 9 per cent in the comparable period a year ago. On a total basis, food sales saw a 4.5 per cent jump to £1.4 billion.

"We start our summer sale today, a week later than past year, with terminal stock for the season significantly down", Rowe added.

There were some pockets of good news, in the food department M&S is gaining market share overall, and full price clothing sales were ahead of the wider United Kingdom market. "In our Food business, we delivered strong growth from new Simply Food openings, and are prioritising better ranging and stronger promotions", Chief Executive Steve Rowe said in a statement.

British store chain Marks & Spencer's turnover grew several percent in the first quarter of its fiscal year 2017/2018.

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Rowe has also tried to lift food sales by opening extra Simply Food stores, expanding its products range and delivering more promotions.

In clothing, a key tenet of the plan has been to cut back on discounting, with the quarter seeing revenue down 0.5% in line as full price sales were up roughly 7% the number of promotions was reduced and there was no clearance sale in the quarter compared with one a year ago.

She said: "Analysts are starting to question whether M&S is falling behind its peers, particularly in food and drink sales".

Shares in M&S fell 1.3% in early trade on Tuesday.

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