Marks & Spencer falls short of its third quarter forecast
British analysts were quick to blame the “general merchandise” segment, which includes Marks & Spencer apparel. In the last quarter ending late December, sales in the general merchandise segment of the British retail giant dropped 2.2% compared to the same period last year. While the group projected a worst-case scenario at 3.5% in like-for-like sales, the final result for general merchandise was 3.8%. For overall sales in Great Britain, the group enjoyed a 0.3% increase (driven by its food business), but still suffered a -1.8% drop on a like-for-like basis.
“Our Food business has performed very well with record sales over the key Christmas trading period,” said group CEO Marc Bolland in a statement, whose job is thought to be under threat according to some voices in the British media. “Our General Merchandise performance is not yet satisfactory but we are confident that the steps being taken by the new management team will address this.”
The group recently hired John Dixon to run its non-food segment, replacing Kate Bostock who moved to Asos. However the transition has not been a smooth one. Drapers reported today that Carole Boyes-Weston, in charge of women’s design for M&S, is leaving her post after only five months at the job. The British website states that Karen Peacock, currently in charge of design for the retail giant’s footwear and accessories lines as well as its Autograph, Indigo and Classics collections, will fill in for Boyes-Weston in the interim until a new head for the Limited and Per Una labels can be recruited.
Overall business for Marks & Spencer grew by 0.6% on a constant currency basis, compared to the same period in 2011. The result is largely due to a 10.8% increase in multi-channel sales, but also by a 4.1% rise in international sales on a constant currency basis.
However, Marks & Spencer notes that despite strong business in India and China, its international results were adversely impacted by unfavorable exchange rates and continuing difficulties in the Irish and Greek markets.
Although the group has finalized its plans for a new e-commerce distribution center in April and a new logistics platform for spring 2014, it still expects a difficult 2013.
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