News Column

Marks & Spencer web sales slump, but womenswear rises

July 9, 2014



The country's biggest clothing retailer, which also sells upmarket food, said first-quarter sales were held back by its transition to a new website, as previously flagged, and kept its full-year profit guidance.



British retailer Marks & Spencer reported a small rise in sales of its flagship womenswear on Tuesday, saying it was a sign years of investment were starting to pay off despite a 12th consecutive quarterly drop in overall general merchandise sales.







The country's biggest clothing retailer, which also sells upmarket food, said first-quarter sales were held back by its transition to a new website, as previously flagged, and kept its full-year profit guidance.







It said sales of womenswear at stores open over a year were "slightly higher," without providing a figure. But some analysts said chief executive Marc Bolland, who will face shareholders at an annual meeting later on Tuesday, still had much to prove.







"It will still take a considerable amount of time for M&S to demonstrate that it can break the mould, grow its non-food offer, maintain market share and build earnings," said Shore Capital'sClive Black, who has a "hold" stance on M&S stock.







Bolland, CEO since 2010, has spent 2.3 billion ($3.9 billion) over the past three years in a push to address decades of underinvestment, overseeing the redesign of products and stores and an overhaul of logistics to serve the new website. However, a new clothing team he set up in 2012 has failed to deliver a sustained increase in sales and, for the first time, M&S earned less in the year to the end of March than its faster-growing rival Next.







The new website, launched in February, is a pillar of the intended transformation of the 130-year-old business into an international retailer reaching customers through stores, the internet, tablets and mobile devices.







Its "settling in" problems are likely to be among the criticisms Bolland will face over the firm's underperformance from elements of M&S's army of private shareholders, who own about 30 per cent of the retailer's equity.







The CEO announced a shuffling of executive responsibilities last week, putting online boss Laura Wade-Gery in charge of UK retail a move which sparked speculation the firm was planning for an eventual successor to Bolland.







Shares in M&S, down six per cent over the last year, were 1.6 per cent lower at 426.2 pence at 0935 GMT, valuing the business at about 7 billion. M&S said like-for-like sales of non-food products, spanning clothing, footwear and homewares, fell 1.5 per cent in the 13 weeks to June 28 in line with analysts' forecasts of down 1-2 per cent but worse than a decline of 0.6 per cent in the fourth quarter of M&S's 2013-14 financial year.







"We have seen a continued improvement in clothing, although, as anticipated, the settling in of the new M&S.com site has had an impact on sales," said Bolland.












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Source: Khaleej Times (United Arab Emirates)


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