M&S clothing sales slump drags shares down

Added 7th July 2016

Marks & Spencer’s share price was down 1.05% to 291p Thursday morning following news of its persistent clothing sales slump.

M&S clothing sales slump drags shares down

Despite attempts to revitalise its clothing and home business by offering lower prices and fewer promotions, this area took the biggest hit with like-for-like sales declining by 8.9%.

Chief executive, Steve Rowe, stated that the company had anticipated a reduction in sales following the adoption of this new strategy for its clothing and home division in May.

“A key part of our recovery plan for Clothing & Home is lowering prices and reducing promotions,” he said.  “As a result, we ran fewer price promotions while continuing to lower prices to deliver real value to our customers, and moved the summer sale to July. We knew our actions would reduce total sales but we are seeing some encouraging early signs.”

While group sales rose by 0.2% at constant currency, the British retailer struggled to bring in sales growth in the UK over the first quarter in general, reporting a 4.3% dip in total UK like-for-like sales. 

Like-for-like food sales were also down 0.9% in the 13 weeks to July 2016, 0.5% of which was due to Easter timing, the retailer said. Total food sales were up 4.0% however, managing to outperform a deflationary market.

M&S also blamed the EU referendum for negatively impacting its sales performance in May.

“While it is too early to quantify the implications of Brexit, we are confident that our strategic priorities and the actions we are taking remain the right ones to deliver results for our customers and our business," Rowe stated.

Ian Forrest, investment research analyst at The Share Centre, opined: “There were few signs of improvement in these numbers given the strategy outlined by new chief executive Steve Rowe in May, although the company said it would take time to see the benefits.”

“Today’s update gave little comfort to investors that the new strategy is having much impact, although it talked of ‘encouraging early signs’,” Forrest added. “We continue to recommend the shares as a ‘buy’ for medium risk investors seeking a balance of income and growth due to the strength of the growing food business, the significant potential to increase profitability in general merchandise, and the healthy dividend. The new plan from Steve Rowe will take time to work and further details are expected in November.”

Kames Income Hub

home_research_centre

Vincent McEntegart, manager of the Kames Diversified Monthly Income Fund, explains how he aims to deliver a stable and sustainable income of 5% p.a.*, paid monthly, by investing in a range of asset classes

Square Mile Research

Jupiter UK Special Situations
Jupiter UK Special Situations...

Talking Factsheets is a video service for users...

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address

Profiles

Viewpoint

Investment Strategy

Feature

Tweets

Events

PA Emerging Markets 2017
PA Emerging Markets 2017

Tuesday 7 February
Bloomsbury Street Hotel, London

PA SRI 2017
PA SRI 2017

21 February 2017
Bloomsbury Street Hotel, London

PA Japan 2017
PA Japan 2017

Wednesday 8th March
Furniture Makers' Hall, London

PA Dublin 2017
PA Dublin 2017

Tuesday 14th March
Westbury Hotel, Dublin

Sponsored Content

Investment Strategy

OTHER STORIES FROM LAST WORD...