MARKS & Spencer was hit by a worse-than-expected drop in general merchandise sales over the Christmas quarter, the retailer was forced to reveal last night after figures were leaked after trading hours.
Britain’s biggest clothing retailer said like-for-like sales at UK stores open for more than a year fell 1.8 per cent in the 13 weeks to 29 December.
And non-food sales, which include clothing and homeware, slumped by 3.8 per cent on a like-for-like basis compared to analysts’ forecasts, which ranged from up 0.5 per cent to down 3.5 per cent.
Chief executive Marc Bolland admitted that while food – which grew by 0.3 per cent – “performed very well with record sales over the key Christmas trading period” the performance in non-food “is not yet satisfactory”.
But he defended the fall, insisting that “the steps being taken by the new management team will address this”.
In May, Bolland shook up the non-food team after M&S posted its biggest quarterly sales drop in three years.
He said under the new team the group has since decided to reduce the level of promotions on clothing and to keep more stock at full price to protect margins.
“We have our stock into sale down by five per cent so we managed stock very tightly and our promotional sales were down seven per cent on the year,” Bolland said.
M&S’ poor sales all but confirms what has been one of the most challenging Christmases for retailers.
With the retail market showing minimal growth, retailers are battling to win market share and lure cash-strapped spenders.
Commenting on prospects for 2013 Bolland said: “We expect the pressure on consumers’ disposable incomes to continue in 2013.”
The former Morrisons chief said he is in the third year of a three-year plan to make M&S an international, multi-channel retailer.
“We are making good progress against this plan,” he said, denying that the company’s lacklustre performance in clothing this year had thrown into question his future with the company.