Like-for-like general merchandise sales fell 2.1% during the third quarter

Like-for-like general merchandise sales fell 2.1% during the third quarter

Marks & Spencer has seen its general merchandise sales fall for a tenth consecutive quarter, even though the UK retailer said it saw early signs of improvement in its women's wear business.

The company today (9 January) said like-for-like general merchandise sales - which include clothing and footwear - fell 2.1% during the 13 weeks to 28 December. Total general merchandise sales slipped 1.1%.

Despite a challenging quarter for the general merchandise market, with unseasonal conditions and higher than ever levels of discounting, chief executive Mark Bolland said customers responded positively to the company's re-focus of its women's wear on quality and style - resulting in small market share growth in this area for the first time in three years.

"We delivered a good performance across key categories including coats, dresses and footwear. We managed stocks tightly, resulting in a clean position at the end of the quarter."

During the key Christmas trading period, the retailer saw general merchandise sales climb 1.5%, and like-for-like general merchandise sales edge up 0.5%.

"We delivered an improved performance in general merchandise over the important Christmas period, with sales up 1.5% in a highly promotional market. However, an exceptionally unseasonal October, which saw general merchandise sales down strongly, has resulted in a quarterly performance below our expectations," Bolland added.

Group sales rose 1.8% during the quarter, and were up 3.2% over the Christmas period. Total UK sales grew a respective 1.5% and 2.7% during the third quarter and Christmas trading period.

On a like-for-like basis, sales edged down 0.2% in the three month period, but climbed 1% over Christmas.

Given continued pressure on disposable incomes, M&S said it remains cautious in its outlook as it continues to try and transform the company into an international, multi-channel retailer.

M&S said it expects full-year general merchandise gross margin to be down 30-50 basis points as a result of its investment in promotional activity. 

Commenting on the results, Conlumino analyst Neil Saunders said: "Taking the third quarter as a whole, M&S has posted a poor set of numbers which, on the general merchandise front, make for very discouraging reading."

The company's performance, he noted, is still worse than department store retailer Debenhams, which reported a 0.1% decline in like-for-like sales over the 17 weeks to 28 December.

"All of this raises a question mark over how successful the new general merchandise strategy is. At a broad level we still maintain that, on clothing, the pace of change needs to go further and faster," Saunders added.

"Moreover, we believe that greater focus and clarity is required in delivering for the target market. Over the next ten years the most significant opportunity in clothing comes from the older, younger at heart generation of over 50s. It is far from clear that M&S is fully addressing the needs of this important constituency."