Food Sales
Going forward, M&S has planned and targeted to concentrate on increasing food sales
Sales at Marks & Spencer have fallen for the six months to the 26th of September.
UK like-for-like sales fell by 0.4% for the period, and while sales of general merchandise, which includes the clothing division, were down by 1.2%, food sales rose by 0.2%.
The retailer said underlying profits rose by 6.1% to £284 million, although after taking into account one-off items, pre-tax profit fell 22.7% to £216m.
Those one-off items included almost £27m on revamping UK stores and £22m on European store costs.
M&S noted that it plans to concentrate on increasing food sales, gross margins and cash generation.
Premium retailer said food sales in Christmas week were up a record 17%, and like-for-like sales grew by 0.1%
Marks and Spencer’s food business grew like-for-like sales by 0.1% in the 13 weeks to 27 December.
Total food sales rose by 2.8%, while sales in the Christmas week were up 17%.
The premium retailer said it had seen “record Christmas sales” in food, which “strongly outperformed the market”.
Despite a strong performance in the category, total like-for-like UK sales for the company fell by 2.7%, after a terrible performance in its general merchandise division, which includes womenswear, and where like-for-like sales were down 5.8%.
“Our food business delivered another excellent quarter, significantly outperforming the market by around three percentage points,” said CEO Marc Bolland.
“We saw record sales over the festive period, up 17% in the key Christmas week. Customers once again turned to us for our highly differentiated food offer, combining the best of quality, seasonal speciality and convenience, all at competitive prices.
“We launched nearly 750 new products giving customers more choice than ever, with record results in turkeys, party food, desserts and deli,” he said.
Bolland said disruption at the company’s Castle Donington distribution centre “strongly impacted” .com and general merchandise performance in December.
And he said overall international business was “heavily impacted” by the worsening currency and economic issues across its Middle East and Russia franchise region, but the business had performed well in other key markets such as India.
M&S will report its fourth quarter trading results on 2 April 2015.
Premium retailer’s food like-for-like sales were up 1.7% while online sales plummeted by 8.1%
Sales from Marks & Spencer’s website M&S.com fell by 8.1% in the first quarter of 2014, while food like-for-like sales rose 1.7%.
The company said its buoyant food business has been driven by a strategy to be more specialist, as well as new products.
Chief executive Marc Bolland said the new M&S.com site has had an impact on general merchandise sales, while food continues to outperform the market.
“Our food business had a great quarter with our strategy to be more specialist setting us apart from the competition,” he said. “With value top of mind for customers, we remained price competitive while protecting our gross margin. We launched some 700 new products giving customers more choice than ever.
“In line with our increased focus on margin, we were less promotional, both online and in stores. While this has affected the sales performance, particularly online, we are on track to deliver our full year gross margin guidance.”
Bolland confirmed that the premium retailer is on track to open 150 new Simply Food stores opening over the next three years.
He said the website has been “technically resilient” and confirmed the company is now focused on optimising the website commercially, with updates made on a regular basis.
“We have recently seen a gradual improvement in sales performance, despite a lower level of promotional activity. We expect to return to growth ahead of our peak trading period,” he added.
Trading conditions in the Republic of Ireland continue to be challenging, Bolland said, while sales in the Middle East were impacted by the timing of shipments to franchise partners.