M&S reports on a challenging Q3

Date : 10 January 2013

M&S has reported group growth of 0.6% for the 13 weeks to 29 December 2012. Total UK sales grew just 0.3%, with LFL of -1.8%. Food outperformed the total business, showing a 2.7% total uplift and a LFL rise of 0.3%.

Headline figures from Q3

  • Group sales: +0.6%
  • Total UK sales: +0.3% (-1.8% LFL)
  • Food sales: +2.7% (+0.3% LFL)
  • General merchandise: -2.2% (-3.8% LFL)
  • Multichannel sales +10.8%
  • International sales +4.1%

Food performance driven by innovation

Over the two week key Christmas period M&S recorded record sales of nearly £330m, a strong performance in a sluggish market. This has in part been attributed to its new focus on innovation, with over 700 new products launched during the quarter. LFL sales on a 14 week basis to 05 January, which includes New Year's trading on a comparable basis, were up 0.9%.

General merchandise disappointing

Sales of general merchandise have continued to fall, with LFL sales -3.8%. Although recognising that general merchandise performance is not yet satisfactory, stocks have been managed tightly, leaving M&S in a 'clean position' at the end of the quarter. Promotions were lower in number but more targeted in their approach, a tactic likely to continue as M&S really looks to reinvigorate general merchandise in the final quarter.

Standout growth from multichannel and international

Multichannel made an important contribution to total sales, with 10.8% growth, while sales from mobile devices grew by over 90%. This was supported by free next day store collection that was launched in the quarter with M&S able to leverage its broader store network, including Simply Food stores, as collection points, with around 40% of online orders coming through stores. However, its online performance did lag that of both John Lewis and Debenhams, though it was similar to that of Next. As it looks to continue its success in multichannel M&S will be launching a new e-commerce distribution centre and web platform that it plans to launch in Spring 2013 and 2014 respectively. International sales delivered growth of 4.1%, with India and China its key international markets.

Outlook

Marc Bolland, chief executive said "We expect the pressure on consumers' disposable incomes to continue in 2013. As a result we remain cautious about the outlook for the year ahead. Our plan is to transform Marks & Spencer from a traditional UK retailer to an international multi-channel retailer. We are making good progress against this plan".

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