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Decline in M&S home sales continues

M&S Cheshire Oaks 725 x 500

Marks & Spencer Group PLC has reported on on Quarter 4 2015/16 trading, covering the 13 weeks to 26 March 2016.

Food sales continue to outperform the market

  • Sales +4.0%; LFL +0.0%; grew market share to 4.3%
  • New store opening programme performing ahead of expectation

Significant increase in Clothing and Home gross margin

  • Gross margin now expected to be between +240 to +250bps
  • Continued improvement in buying margin and some investment in price

Some progress in Clothing and Home sales but more to do

  • Sales -1.9%; LFL -2.7%; reduced proportion of sales on promotional discount 
  • M&S.com sales +8.2%; further improvement in customer satisfaction

Strong cash generation 

  • Continued tight management of costs and cash
  • £150m share buyback programme completed

Steve Rowe, Chief Executive, said:“I am very proud and privileged to be leading M&S.  We are focused on getting even closer to our customers and putting them at the heart of everything we do."

“We had a mixed performance in the final quarter of the year. Our Food business once again outperformed the market by c.3.5% pts.  Although the sales decline in Clothing and Home was lower than last quarter, our performance remains unsatisfactory and there is still more we need to do.  

“Turning around our Clothing and Home business by improving our customer offer is our number one priority.  I will update you on my thoughts on the business in May.”

Trading summary

Overall, group sales were +1.9% for the quarter.

The Food business continued to outperform a highly competitive market. In line with our strategy, our store opening programme continues to drive strong sales growth. We opened 80 new stores in the year and as a result we grew our market share to 4.3%. Customers turn to us for special occasions and this quarter was no exception with our biggest ever Mothers’ Day. We continued to invest in our special and different products launching 400 new lines whilst also offering great value for our customers.

In Clothing and Home, we faced a challenging backdrop characterised by price deflation and a flat market. Spring/Summer season launched with significantly higher product availability than last year. We continued to make improvements across range and design, for example, our Autograph sales were up 10%. We also began to reduce the proportion of sales on promotional discount and will continue to do so as we head into the new financial year. However as flagged at quarter three, we had more stock into sale. At the same time, we invested in sharpening our prices on a number of lines, whilst delivering a strong gross margin improvement. Although these actions contributed to the sales run rate improving since the last quarter, we still have a number of areas to address.

M&S.com delivered a good performance with strong improvement in customer satisfaction scores driven by improved website speed and ease of navigation. We ran fewer online only promotions giving customers a more consistent shopping experience across our channels.
Despite improved sales in both our franchise and owned businesses in International, the previously guided currency pressure and challenging trading conditions are still expected to heavily impact the full year profitability. 

    
 

 

Fourth quarter sales

 

13 weeks to

26 March 2016

 

 

Group sales1           

 

 

+1.9%

 

Food2

-          Like-for-like

 

+4.0%

+0.0%

 

Clothing and Home2

-          Like-for-like

 

 -1.9%

-2.7%

 

M&S.com sales3

 

+8.2%

 

 

 

 

 

Total UK sales

-          Like-for-like

 

+1.6%

-1.1%

 

International sales1

 

+3.8%

 

 

 

 

1Stated on ex-VAT and constant currency basis. International sales at actual currency were +4.3% and Group sales were +1.9%. 2Timing of Easter contributed 1.0% to Food and 0.4% to Clothing and Home sales. 3Memo only. 

Source : http://corporate.marksandspencer.com/


Analyst View

Martin Lane, a representative at www.money.co.uk, gave us his thoughts: 

“Despite fierce competition in the supermarket sector, M&S appear to be winning the battle by making it clear with their branding that they offer posh nosh, shoppers always know where to go when looking for something that extra bit special and of course Percy Pigs.   

“M&S clothing on the other hand still carries a certain stigma which the brand can’t seem to shake. The new Sparks Card hasn’t performed as well as they had hoped, which is a shame because the card was designed to make shopping more personal, offering discounts on items their customers regularly buy-a model that seems to work for its online competitors.  

"Despite offering men’s clothes the brand only appear to market themselves as a women’s only store. Perhaps a rebrand of their clothing line is in order and would help shake up the consumer perception."

Source : www.money.co.uk  


 

07 April 2016

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Thank you for the excellent presentation that you gave at Woodbury Park on Thursday morning. It was very interesting and thought-provoking for our Retail members. The feedback has been excellent.

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Martin Elliott. Chief Executive - Home Hardware.
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