Nov 5, 2013
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Marks & Spencer clothing sales fall for ninth straight quarter

Nov 5, 2013

LONDON, England - British retailer Marks & Spencer reported a ninth consecutive quarterly fall in underlying sales of general merchandise, with its much vaunted new season clothing ranges only managing to slightly slow the rate of decline.

The 129-year-old group, which serves 21 million customers a week from nearly 770 British stores, also posted on Tuesday a 9 percent fall in first-half profit - down for a third year running, though in line with expectations.

A still from the M&S Christmas ad featuring Rosie Huntingdon-Whiteley | Source: M&S

M&S said its overall expectations for the 2013-14 year were unchanged even though it remained cautious about the outlook given continued pressure on consumers' disposable incomes.

Britain's biggest clothing retailer, which also sells homewares and food, said sales of non-food products, spanning clothing, footwear and homewares, at stores open over a year fell 1.3 percent in the 13 weeks to September 28, its fiscal second quarter.

That compared with analyst forecasts of down 0.4-2.5 percent and a first quarter decline of 1.6 percent.

Chief executive Marc Bolland, in the final year of a three-year, 2.3 billion pounds investment drive to make M&S an international retailer connecting with customers through stores, the Internet and mobile devices, is pinning his hopes on a new clothing strategy based on more stylish and higher-quality garments.

Though the autumn/winter ranges - the first from a clothing team led by John Dixon, the former boss of M&S food - hit stores on July 25, the full launch, together with a high-profile advertising push featuring some of Britain's biggest female celebrities, did not kick off until September.

"Although only in store for three weeks of the half year, our autumn/winter collection has been well received by customers, and we have seen some early signs of improvement," said Bolland, CEO since 2010.

He has denied the autumn/winter ranges represent a make-or-break moment for his stewardship of the firm, whose shares have risen 27 percent this year on recovery hopes and bouts of takeover speculation, stressing that directionally it is on the right track now that decades of under-investment are being addressed.

M&S's food business, which contributes over half of group sales, is performing much better. Its sales on the same basis rose 3.2 percent - at the top end of analyst forecasts of a rise of 3.0-3.2 percent.

First-half profit before tax and one off items was 261.6 million pounds, in line with analysts' average forecast of 262 million pounds but down from 287.3 million pounds last year, on sales of 4.9 billion pounds, up 4.3 percent.

Shares in M&S closed on Monday at 487.1 pence, valuing the business at 7.85 billion pounds.

It emerged last week that Bill Adderley, founder of homewares retailer Dunelm, had amassed a 3 percent stake in M&S, making him the firm's biggest private investor.

M&S is paying a maintained interim dividend of 6.2 pence.

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