UK: M&S on road to "recovery" as Q4 clothing sales grow
- Q4 group sales rise 1.9%
- Clothing sales grow 1.3%
- Up 0.6% on like-for-like basis
M&S' clothing sales climbed 1.3% during the fourth quarter
Marks & Spencer is "showing some green shoots of recovery", analysts believe, after the UK retailer recorded an increase in clothing sales during the fourth quarter, boosted by its strengthening womenswear business.
The retailer, which has been working to transform its core offering for some time, said clothing sales climbed 1.3% for the 13 weeks to 31 March, and were up 0.6% on a like-for-like basis.
Following a better performance over Christmas, the group said its womenswear business delivered a good like-for-like sales performance during the quarter.
Sales of M&S Collection in womenswear, which was re-launched last autumn, were notably up on last year. The group added that its new spring/summer collection has been "well received".
Total general merchandise sales rose 0.2%, while like-for-like sales slipped 0.6%.
"We delivered another quarter of improvement in general merchandise ... We are encouraged by womenswear, which is showing clear signs of improvement and performed ahead of clothing," said chief executive Marc Bolland.
In the UK, sales were up 1.5% but edged down 0.2% on a like-for-like basis.
International sales increased 4.7% with strong performances from its priority markets, including India, as well as its flagship stores in China and the Gulf. Online sales grew 12.5% during the period.
Despite some improvement in consumer confidence, M&S said it remains cautious about the outlook. The group expects second-half general merchandise gross margin to be down, and full-year gross margin to decline around 20 basis points.
Conlumino analyst Neil Saunders noted: "Indeed, it is worth noting that although positive, M&S' latest numbers are not high enough for it to have grown its clothing share; by our calculations M&S has underperformed the market during this period and, as such, has continued to cede share."
The challenge for M&S, he added, is to start to rebuild some of the market share it has lost over the past decade and more.
"In a market that remains crowded and competitive, and with a business model that still needs some refinement, this will be a tall order and one that can only be achieved by a more radical rethink of the proposition."
The company's share price rose 0.55% to GBP458.50 at 9:55am this morning.
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