The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
LONDON, United Kingdom — Marks & Spencer Group Plc reported a worsening drop in non-food sales, adding to the pressure on Chief Executive Officer Marc Bolland in his fifth year at the helm.
Same-store sales at the general-merchandise unit fell 4 percent in the quarter ended in September, the London-based retailer said in a statement today, compared with the median analyst estimate for a 3.5 percent decline. Pretax profit in the six months through that date exceeded estimates, M&S said, raising its full-year forecast for profitability.
Bolland has presided over more than three years of falling non-food sales as shoppers have shunned the company’s clothing collections and switched to rivals such as Next Plc and budget stores including Primark. The second-quarter performance was the worst since he took charge as demand for sweaters and coats was affected by unusually warm fall weather.
“Despite some improvement in consumer confidence, market conditions continue to be challenging,” the company said in the statement. “As a result, we remain cautious about the outlook for the remainder of the year.”
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First-half underlying pretax profit rose to 268 million pounds, compared with the 253 million-pound average estimate of 18 analysts in a Bloomberg News survey.
M&S said that sales of its fall-winter collection were weighed down by warm weather in September, which it estimated reduced quarterly sales by about 2.5 percent. U.K. temperatures averaged 18.5 degrees celsius (65.3 degrees fahrenheit) that month, 1.5 degrees higher than the same period last year, according to business weather intelligence firm Planalytics.
“It’s fair to say that the weather planning has not taken account of what weather actually occurred,” said Tony Brough at Planalytics, though the sales decline can only be partly explained by outdoor temperatures. Other clothing retailers such as Next were in the same position, Brough said yesterday.
Profit margins in general merchandise widened by 1.5 percentage points, ahead of the company’s full-year guidance for an increase of 1 percentage point, M&S said. The retailer raised its forecast for the year to a gain of 1.5 to 2 percentage points, from 1 percentage point.
Same-store sales in the retailer’s food division rose 0.2 percent, in the quarter, M&S also said, compared with the 0.3 percent median estimate of 19 analysts.
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