A tough October resulted in a fall in like-for-like clothing and home sales for M&S

A tough October resulted in a fall in like-for-like clothing and home sales for M&S

Marks & Spencer has revealed a mixed third quarter, with unseasonal weather blamed for a fall in like-for-like sales in its clothing division but a pick-up in its Christmas trading performance.

The retail group's share price was down nearly 10% in morning trading today (11 January) as it reported like-for-like declines in both its clothing and food divisions, as well as a fall of 0.1% in group sales to GBP3.17m (US$4.28m).

The high street bellwether said a tough October resulted in a 2.8% fall in like-for-like clothing and home sales over the 13 weeks ended 30 December. Total sales for the division were down 2.3% to GBP1.2m.

The declines, however, were not as bad as expected, with M&S performing well enough to avoid issuing profit warnings like other retailers this week, including Debenhams and Mothercare.

The retailer also said a pick-up in revenues over the Christmas weeks helped make up for the weak clothing market and more difficult trading in its food business, with consumer spending under pressure reflecting tighter budgets.

M&S, which is currently undertaking a turnaround strategy, said it has continued with its strategy of restoring price integrity and improving everyday value in its clothing division. Last month it revealed it was accelerating plans to close underperforming clothing departments – with plans for a reduction of 1.5% this year.

M&S accelerates clothing department closures

As part of its new strategy, the retailer is undertaking a significant review of its cost base with the aim of generating a substantial reduction in legacy and structural costs. Yesterday it announced a new technology transformation initiative that will enable it to become a digital first business and deliver an improvement in customer experience – but will also lead to the consolidation of its technology supplier base.

M&S consolidates technology supplier base under new plans

"We continue with the accelerated transformation programme we outlined in November and have recently taken several important steps to reshape the business for the future," said chief executive Steve Rowe. "These include a new technology partnership and organisation, and the sale of our Hong Kong based business in line with the streamlined franchise-led model we are adopting for International."

Completion of the planned closure of owned stores in loss-making markets meant international sales were down 9.8% in the quarter. In retained owned and franchise markets, constant currency revenue increased by 6.5%. 

In a separate announcement, M&S said it has appointed Humphrey Singer, currently group finance director at Dixons Carphone, as its finance chief.

A start date is yet to be confirmed but he takes over from Helen Weir who announced her decision to step down in November to "pursue a plural career" after two years with the group. 

Honor Strachan, principal retail analyst at GlobalData, says the decline in clothing and home sales was foreseeable due to price cuts across much of its core offer and a reduction in discounting weakening its performance.

"We do expect both these strategies to deliver in the long term as its customers gain confidence in the value of full price product. The recruitment of Victoria Self as the new digital director of clothing, home and food in November and the appointment of Humphrey Singer to replace Helen Weir as chief finance officer bring further changes to Steve Rowe's management team in a year that we would expect to see more tangible results from its transformation plan."

Marks & Spencer will report its full-year results on 23 May.