Marks & Spencer reveals 'calamitous' first quarter sales fall

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A new fashion collection from model Alexa Chung has failed to save ailing Marks & Spencer from a “calamitous” sales collapse, new trading figures revealed.

Aggressive price-cutting and weak consumer spending in the run-up to the EU referendum were blamed for the spectacular 8.9% slump in clothing and homeware sales — the worst for more than a decade.

The new boss of the retail giant, Steve Rowe, said the figures for the three months to the start of July were “not the numbers I want to see” and retail analysts described them as “an absolute shocker”. 

The scale of M&S’s struggle to regain its once dominant high street status was highlighted by a seven per cent sales rise at discount rival Primark, also announced to the City today.

Alexa Chung’s 31-piece collection Archive was launched in February and was inspired by M&S classics dating back to the Forties in the latest bid to overhaul the retailer’s dowdy fashion reputation. 

But on the website today all 24 “unique pieces” available to order online were being heavily discounted with the Myrtle jumper down from £29.50 to £18 and the Nellie boots reduced from £65 to £29.

Mr Rowe, who replaced Marc Bolland in April, said across-the-board price cuts and a later launch of the summer sale were largely responsible for the equal biggest quarterly fall in clothing sales since 2006. Without these changes the fall in sales would have been only 3.9%. 

He said “These are not the numbers I want to see in clothing and home, not by any stretch, but they are the numbers I expected to see given the strategic priorities we outlined in May.

“Prices were too high and in places we were too promotional and that eroded value. We want to break this cycle which is damaging to the business and not sustainable in the long term.”

“The problems at M&S are starting to look terminal.”

John Ibbotson, Retail Vision

He insisted there were “some encouraging early signs” the strategy is working.

Even M&S’s normally reliable food halls failed to offset the downturn in women’s wear with a 0.9% fall leaving UK overall like-for-like sales down 4.3%.

The City was unimpressed and M&S shares, already down more than a quarter since Mr Rowe stepped up to the top job, sank as much as 3%, or 8.7p, to 285.4p.

Most commentators were equally unsparing in their criticism of the performance of the 132-year-old business, with one even suggesting the problems were “starting to look terminal”.

Neil Saunders, managing director at retail research agency Conlumino, said: “Calamitous numbers from M&S — although reduced promotions and a later summer sale were both unhelpful, the product’s still not right.”

John Ibbotson, director of the Retail Vision consultancy, said: “Today’s younger shoppers simply do not have the emotional bond with M&S that older people have. As a result, they’re shopping elsewhere, whether with Next, New Look, Primark and other affordable luxury brands.

As hard as it is to say, the problems at M&S are starting to look terminal.”

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July 7, 2016 |
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