M&S investors spooked by slowdown in food sales

M&S investors spooked by slowdown in food sales

M&S investors spooked by slowdown in food sales

The dip in food sales comes as M&S tackles the industry-wide challenges of a competitive grocery market and inflationary pressures weighing on the consumer, according to AJ Bell.

However, like-for-like food sales dipped by 0.1% - which was worse than expected - and without Easter falling in April, comparable revenue across the United Kingdom business would have declined further. Underlying food sales had also declined 2.1% in the previous quarter.

Clothing sales at M&S fell by 1.2 per cent - less than the City had feared - in the first quarter.

The group's outlook for full year 2018 was unchanged.

The group started its summer sale on Tuesday this week, with "significantly" less stock to discount. "Overall, the sales numbers are modestly below expectations but the commentary is reasonably encouraging with new Simply Food stores performing well and the increase in full price clothing sales sounding positive for profit implications".

Overall Marks & Spencer achieved group revenue of just over £2.5bn (up 2.6% year-on-year) with Food sales up 4.5% year-on-year (-0.5% like-for-like) at £1.4bn and global sales up 3.8% at £272.3m. If this continues to come out on the weak side then we could see retailers continue to struggle. On a total basis, food sales saw a 4.5 per cent jump to £1.4 billion.

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M&S said that the timing of Easter this year lifted food sales by 0.7% and clothing and home trade by 0.6% in the quarter.

Overseas sales were 4% lower with currency changes stripped out as it shut 28 of 53 stores under a plan to pull out of 10 worldwide markets to refocus on its core United Kingdom business.

There was a need for "stronger promotions", he said, adding that the performance of stores was also being affected by expansion as new M&S food outlets sprung up on their doorstep.

In November, M&S said it would close 60 clothing and home stores to build a "sustainable business".

Chief executive Steve Rowe said trading in the first quarter was "in line with expectations" and the company is "on track with delivery of the plan announced last year".

Rowe added full price sales were up by approximately 7% in the home and fashion division, as the retailer reduced the number of promotions and there was no clearance sale in the quarter compared with one past year.

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