Marks and Spencer yesterday reported weaker-than-expected fourth-quarter sales, confirming investor suspicions that the UK retailer's recovery plan had been thrown off course.
The 5.2 per cent fall in like-for-like non-food sales in the 11 weeks to March 27th was much worse than the 2.4 per cent fall that some analysts had predicted.
Mr Roger Holmes, chief executive, also conceded that the group had lost ground to its rivals in clothing during the period. Figures for the Irish operations are not broken out separately.
"We would expect that because of this performance we will have lost market share," he said.
But M&S, which has struggled in the face of increasing competition from the likes of discount retailers and supermarkets, had held share in foods, despite like-for-like sales dipping by 1.4 per cent, due to the roll-out of its Simply Food food-only outlets that had added 4.3 per cent in total sales.
Mr Iain McDonald, analyst at Numis Securities, was one of many analysts who downgraded their 2005 forecasts for the group following the announcement.
Cutting his forecast from £814 million (€1.2 billion) to £805 million, he said: "It's pretty poor all round. Particularly disappointing is food, which was one of the strongest parts of the business." Promising that strong control of costs would offset the disappointing sales, Mr Holmes admitted that the performance left little to be pleased with. "Sales this quarter are clearly not good enough," he said.
But he dismissed speculation that the performance had been due to a lack of time spent at M&S by Mr Luc Vandeveld, chairman of the group, who has come under fire for the number of other companies he works for.
Mr Holmes pointed out that Mr Vandeveld's position was part-time and that it was "natural" for him to have other business interests.
Outlining his plans to stem the falling sales, Mr Holmes said that the group was taking action on a number of fronts to transform the business, as underlying clothing sales for the quarter fell by 1 per cent.
M&S has already signalled a dramatic change in its clothing business after it handed responsibility for the division to Mr Vittorio Radice, also head of home furnishings, and former Selfridges boss.
The group is also lowering prices on some of its key womenswear products and increasing its ranges. Mr Holmes said that average prices for the spring/summer collection were already down by 3.5 per cent and that prices could fall further. - (Financial Times Service)
