Growth slows at Marks & Spencer
High street giant to meet profit forecast despite dfficult market
April 8 2003
As expected, Marks & Spencer saw sales growth slow in its fourth quarter, with total UK sales up 2.4 per cent in the 11 weeks to March 29, compared to growth of 7.8 per cent across the year as a whole.
M&S sad it expected full year performance to be at the top end of City forecasts. On a like-for-like basis, UK sales were up 1 per cent for the quarter, compared to 6.7 per cent for the year as a whole. The company said the late Easter had reduced figures the quarter by an estimated 2 per cent for general merchandise and 1.7 per cent for food.
The UK High Sreet icon saw sales of adult clothing increased by just 0.8 per cent across the quarter, holding its clothing market share “in what has been a more difficult trading period, particularly in Greater London.”
However, lower childrenswear sales hit total clothing performance. For the quarter, total clothing, footwear and gift sales declined by 0.3 per cent, compared to a 10 per cent rise across the year. M&S said that the strongest childrenswear lines were its schoolwear offer, along with the DB07 boyswear range promoted by David Beckham.
A sharp increase in home sales. up 9.3 per cent for the quarter compared to 8 per cent for the full year, was due in part to the fact that furniture sales are recorded when products are delivered, with underlying home performance up 1.9 per cent for the quarter.
Total general merchandise sales, which includes clothing and home, increased by 0.6 per cent for the quarter, a 0.4 per cent decline on a like-for-like basis. Across the year, general merchandise sales increased by 9.8 per cent, and 9 per cent like-for-like.
Food, which M&S has focussed on through new product ranges and the rollout of its Simply Food store format, grew by 4.6 per cent across the quarter, up 2.6 per cent on a like-for-like basis, with food sales for the year as a whole up 5.1 per cent, and 3.7 like-for-like. Food outperformed the market over the quarter, with new product launches including products aimed at the Valentine’s Day and Mother’s Day markets, proving popular.
Chief executive Roger Holmes said: “Our general merchandise sales have been affected by weakening market conditions during the last quarter but performance for the year overall has been satisfactory. In food, we have again delivered strong quarterly sales, outperforming the market.
“In the current environment, we will manage our clothing stock commitments and operating costs more tightly. At the same time we will continue investing in long term growth initiatives, rolling-out the successful Simply Food format, reinvigorating financial services and developing our Home business.”
The company said it expects to improve clothing margins by about 1 per cent in the year ahead. Investment in initiatives such as Simply Food and the home offer, along with the national roll out of the new combined M&S credit and loyalty card, will increase total opertaing costs by about 3 per cent.
