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Too much information: Nick Clegg reveals he buys his pants from Marks & Spencer but it's not enough to stop clothing sales slump
Deputy Prime Minister gives unnecessary insight into his shopping habitsRetailer reports 7th quarter of falling sales of clothing and homewareChief executive Marc Bolland under pressure after poor 2012
and disappointing Christmas sales.
He has previously warned a new general
merchandise management team led by John Dixon, the former boss of food,
will not make a major impact on sales until M&S launches its
autumn/winter collections in July.
Too much information! Nick Clegg on dying his hair and what he…
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But the 3.8 per cent fall in non-food sales was still better than many in the City had expected. Most City analysts had forecast a fall of 4.6 per cent and a revised fall of 3.8 per cent in the third quarter as M&S moved to protect its profit margins by offering fewer discounts in the run up to Christmas.
M&S shares were trading 3.6 per cent higher at 397.6p in London following the release of the results. They closed yesterday at 384p, valuing the business at 6.1 billion.
Last month M&S shares hit a 28-month high after a newspaper report that the Gulf state of Qatar was planning a bid. A source close to state-owned Qatar Holding denied the report, but speculation of possible private equity interest has persisted.
‘The fourth quarter wasn't as bad as some had expected,’ said James McGregor, director of the retail consultants, Retail Remedy. 'General merchandise is clearly still struggling but these numbers will buy Marc Bolland a few more months. Judgement Day for Marc Bolland will come later this year.’
The trading update also encouraged Sheridan Admans, investment research manager at The Share Centre to rate M&S shares as a ‘buy’.
‘The turnaround of its clothing operation is key to the chief executive keeping his job and we believe that it is tackling the problems in its women’s wear and general merchandise operations. In response to investors, the chief executive has drawn a line in the sand with the expectation of delivering better performance by the autumn, as the retailer prepares to re-vitalise its clothing ranges, Mr Admans said.
‘Investors may be encouraged to see Marks & Spencer post the fastest quarterly sales growth in almost two years.’
Food sales on the same basis rose 4 per cent versus analyst forecasts of an increase of 1.9-3.5 per cent and a third quarter rise of 0.3 per cent. Total UK like-for-like sales rose 0.6 per cent.
‘We are working hard on improving our performance in general merchandise and, despite difficult trading conditions, we made progress in our operational execution,’ Bolland said.
‘In January we said we expect the pressure on consumers' disposable incomes to continue throughout 2013. As a result we were cautious about the outlook for the year ahead and this view remains unchanged.’
British retailers are facing difficult times as consumers has been curtailed by worries over job security and a squeeze on incomes. About two-thirds of Britain’s economic growth comes from consumer spending.
M&S’s trading update reflected sentiment elsewhere on the high street. A survey earlier this week said growth in underlying British retail sales slowed last month despite a boost from an early Easter, as unseasonably cold weather hurt demand for summer clothes and shoes.
Last month, Next reported slower trading conditions since the beginning of February. Department store Debenhams issued a profit warning, blaming January snow.