Apr 11, 2013
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Marks & Spencer clothing sales fall again

Apr 11, 2013

Marks & Spencer, which has been the subject of takeover speculation, said sales as its non-food division at stores open over a year fell 3.8 percent in the 13 weeks to March 30, its fiscal fourth quarter, which was slightly better than expected.

The 129-year-old retailer, which serves 21 million customers a week from over 700 British stores, had to again rely on its strong food division to support overall growth.

Chief Executive Marc Bolland is under pressure to recover M&S's clothing performance after a poor 2012 culminated in a disappointing Christmas.

However, he has cautioned that a new general merchandise management team led by John Dixon, the former boss of food, will not make a major impact on sales until M&S launches its autumn/winter collections in July.

"The fourth quarter wasn't as bad as some had expected," said James McGregor, director of the retail consultants, Retail Remedy. "General Merchandise is clearly still struggling but these numbers will buy Marc Bolland a few more months. Judgement Day for Marc Bolland will come later this year."

The 3.8 percent fall compared with analyst forecasts of a decline of 4-6 percent, according to a company poll of 11, and a 3.8 percent fall in the third quarter when M&S moved to protect profit margins by offering fewer discounts.

Food sales on the same basis rose 4.0 percent versus analyst forecasts of an increase of 1.9-3.5 percent and a third quarter rise of 0.3 percent.

Total UK like-for-like sales rose 0.6 percent.

"We are working hard on improving our performance in General Merchandise and, despite difficult trading conditions, we made progress in our operational execution," Bolland said.

"In January we said we expect the pressure on consumers' disposable incomes to continue throughout 2013. As a result we were cautious about the outlook for the year ahead and this view remains unchanged."

Many British retailers are finding the going tough as consumers, whose spending generates about two-thirds of UK gross domestic product, fret over job security and a squeeze on incomes.

M&S's update chimed with an industry survey on Tuesday which said growth in underlying British retail sales slowed last month despite a boost from an early Easter, as unseasonably cold weather hurt demand for summer clothes and shoes.

Last month Next reported slow trading since the beginning of February, while department store Debenhams issued a profit warning, blaming January snow.

Shares in M&S closed on Wednesday at 384 pence, valuing the business at 6.1 billion pounds.

Last month the stock hit a 28-month high after a newspaper reported that the Gulf state of Qatar was planning a bid. A source close to state-owned Qatar Holding denied the report, but speculation of possible private equity interest has persisted.

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