Online backlash delivers “not good enough” sales for Marks & Spencer

Thursday, 10 July 2014
ANALYSIS_ Marks & Spencer's sales performance in clothing and homeware is "not good enough", its chief executive has said, referring to the 13 weeks to 28 of June. The assessment comes days after the British retailer reported its 12th consecutive quarterly drop in sales.

As admitted by the first executive of the high street retailer, problems with online sales contributed to a 1.5 percent fall in like-for-like sales of general merchandise in the 13 weeks to 28 June.

Bolland adds that issues with Marks & Spencer's revamped website had had "an impact on sales", with online purchases down 8.1 percent in the latest quarter.

Marc Bolland's comments came as he addressed shareholders´ frustration at the retailer's Annual General Meeting. Earlier that same day, Marks & Spencer reported its 12th consecutive drop in quarterly sales of general merchandise, with trading hit by problems at its website.

Womenswear improvement not enough to offset website failure

On a separate note, Marks & Spencer saw its womenswear sales up for the quarter, although like-for-like clothing sales overall were down by 0.6 percent. In this regard, the company´s chief executive pointed out that they “have seen a continued improvement in clothing, although as anticipated the settling in of the new Marks & Spencer.com site has had an impact on sales.”

"We are pleased that the womenswear business was in growth, driven by full price sales, in line with our increased focus on margin,” he concluded.

Not in agreement with Bolland regarding the strong performance of clothing was James McGregor, director of consultancy firm Retail Remedy. "Clothing at M&S is still very much on the rack and we will need to see strong numbers on a consistent basis to be convinced otherwise," warned McGregor, as published by ‘The Guardian’.

General sentiment in the market is that of these results just telling “an old story”. Neil Saunders, managing director at retail analysts Conlumino, highlighted that "The latest update from Marks and Spencer tells an old tale: that the strategy on clothing will deliver results if only it is given more time.

More optimistic, Keith Bowman from Hargreaves Lansdown Stockbrokers said that "Against a backdrop of low expectation, Marks & Spencer appears to have offered some hope.

Underlying sales at Marks & Spencer’ clothing, footwear and homeware arm fell 1.5 percent in the quarter, compared to analysts' forecasts for a decline of between 1 and 2 percent and a drop of 0.6 percent in the fourth quarter (Marks and Spencer share price rises on Q4 trading update).

As per the company´s explanation, the general-merchandise’s underperformance was due to less promotional activity, both online and in stores, as well as to the roll-out of its new website, which it had previously warned would take time to settle in after a 150 million pounds overhaul.

On a positive note, shares in Marks & Spencer (LON:MKS) rose in London after the quarterly update.

Median target of the 22 analysts projecting 12 month price targets for Marks & Spencer for ‘The Financial Times’, is 487.50 pence, with a high estimate of 617 pence and a low estimate of 340 pence, reported ‘Invezz.com’.

Angela González Rodríguez

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