Like-for-like food sales were 1.7% up on the same period last year, in contrast to general merchandise sales. Total general merchandise sales fell by 0.8%, for the 12th consecutive quarter, while like-for-like sales were down by 1.5%.
The retailer’s troubled clothing division posted flat total sales – up by 0.1%, with like-for-like sales down by 0.6%.
Analysts thought the results told a familiar story. The Conlumino team concluded: “The latest update from Marks & Spencer tells an old tale: that the strategy on clothing will deliver results if only it is given more time. There may well be some merit in this story, but it is one that can only be spun for so long before it becomes incredulous.”
‘A rather lacklustre performance’
Conlumino said the results represented “a rather lacklustre performance” – particularly compared with a market that has performed strongly over the past three months.
But the boost in food sales offered some good news, it acknowledged. “The like-for-like numbers look respectable and reflect the continued innovation in the range and the relevance of the offer to consumers. Marks & Spencer’s summer ranges look strong and we believe that its performance should strengthen over the World Cup period and the rest of summer that lies beyond.”
City analyst Shore Capital also praised the retailer’s food results achieved in a difficult market. “We deem this food performance to be a highly creditable one in a demonstrably challenged sector,” said analysts Clive Black and Darren Shirley. “That M&S is outperforming a challenging market is a strong statement of the robustness of the food offer to our minds.”
‘Robustness of the food offer’
Stronger food sales partly reflected the expansion of the Simply Food estate, they added. Marks & Spencer planned to open 150 such new outlets over the next three years.
But, overall, Black and Shirley judged the results to be “another disappointing update” from the firm. General merchandise sales continued to weigh heavily of the retailer’s growth prospects while the retailer’s “dot com fiasco” will leave “a bitter taste for investors”.
The retailer’s online sales were down by 8.1%, as online shoppers delivered more complaints than praise for the platform
Shore Capital retained its 'hold' recommendation on the retailer’s stock.
Marc Bolland, chief executive said: “We have seen a continued improvement in Clothing, although as anticipated the settling in of the new M&S.com site has had an impact on sales. We are pleased that the Womenswear business was in growth, driven by full price sales, in line with our increased focus on margin.”
Meanwhile, the retailer’s food business had “another great quarter”, continuing to outperform the market, through focus on differentiation through quality and innovation, said Bolland.
M&S will post its second quarter trading statement on November 5.
M&S results – at a glance
• Group sales: up by 2.3%
• UK total sales: up by 2%, like-for-like up by 0.3%
• General merchandise: total sales down by 0.8%, like-for-like down by 1.5%
• Clothing: total sales up by 0.1%, like-for-like down by 0.6%
• Food: total sales up by 4.2%, like-for-like up by 1.7%
• M&S.com: down by 8.1%
• International sales: up by 4.7%