M&S Q4 clothing sales hit by inventory issues

UK: M&S Q4 clothing sales hit by inventory issues

By Petah Marian | 17 April 2012

Retailer Marks & Spencer today (17 April) revealed a decline in fourth-quarter clothing sales, admitting to running short of stock in a number of its best selling women's wear lines.

UK clothing sales fell 0.3% over the quarter ended 31 March, while overall UK sales increased 1.2%. General merchandise sales, including clothing, declined 1.2%, while food recorded a 3.1% increase in sales.

On a like-for-like basis, general merchandise recorded a 2.8% drop, while overall UK sales were down 0.7%.

The company said lingerie and children's wear performed strongly, but reported a "mixed" performance in women's wear with some key areas trading well.

"However, we performed less well in other areas where we were short of stock in a number of best-selling lines. We are taking steps to address this by strengthening our merchandising capabilities," the company said.

It emphasised that it managed its stock "very tightly" which resulted in fewer items going into its mid-season sale. "We have had a good start to our new spring/summer launch, with our new ad campaign appealing to a broad customer base," it added.

Consolidated sales increased 0.8% over the quarter, while international sales fell 2%. India, China and the Gulf traded well, with the Paris flagship store performing "ahead of expectations."

However, international sales overall were hit by "continued macro-economic weakness in the Republic of Ireland and Greece, and the announced restructuring of our Central European business".

The retailer is forecasting full-year gross margin to be flat to an increase of 25bps, while operating costs are expected to increase 3-5% as a result of increased space growth, depreciation, inflation and growth initiatives, offset by underlying savings.

The retailer's share price was down 2.94% to 356.9p at 9:05 BST today.

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