Tough Q3 at M&S as AW19 starts well but Christmas was weaker
Trading remained challenging at M&S in Q3 with the retail giant on Thursday reporting just a 0.2% like-for-like sales rise and a total UK sales fall of 0.6% to £2.767 billion for the 13 weeks to December 28. Total sales for the group, which include its international operations, fell 0.7% to £3 billion.
And its crucial Clothing & Home unit saw sales down 3.7% to £1.063 billion but with a smaller like-for-like dip of 1.7% as a strong start to the season was countered by weakness as Christmas got closer.
This late-season weakness also seemed to affect fashion and interiors sales online. Clothing & Home UK online revenue was up only 1.5%, “which was lower than expected”. M&S said revenue was “adversely impacted by competitor discounting in December”.
But despite this, the company saw signs of progress. It said the trading reflected the forward march of its transformation strategy and the slight rise in UK like-for-like revenue was driven by an “improved quarter in both of its main businesses”. The figures above may not look to be that impressive, but they do at least represent a slowdown in the rate fo decline. In the first-half report released in November, for instance, the company talked of Clothing & Home like-for-like sales being down 5.5% so -1.7% looks quite good in comparison.
Clearly, the Food business had the most momentum behind it in the quarter, but Clothing & Home saw an “improved run rate from H1 reflecting strong initial customer reception of [the] Autumn ranges with signs of continuing recovery in core Womenswear”. That’s good news, although it was “offset by underperformance in Menswear and Gifting”.
Also good news was that the firm’s “decisive actions to drive trade in-season including improved availability, a reduction in options and improving value helped reduce the value of stock into [the] sale by 12%”.
That improved availability is clearly a step forward for the firm whose Clothing & Home head had earlier lost her job due to the lack of availability of popular styles.
CEO Steve Rowe was fairly upbeat, saying that the Food business continued to outperform the market and Clothing & Home “had a strong start to the quarter, albeit this was followed by a challenging trading environment in the lead up to Christmas”.
He also said that the firm needs to continue to address “disappointing one-off issues,” including “the shape of buy in Menswear and performance in our Gifting categories [that] held us back from delivering a stronger result”.
But he added that “the changes we made earlier in the year in Clothing have arrested the worst of the issues of the first six months and we are progressively building a much stronger team for the future”.
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