Sales fall again at Marks & Spencer

UK like-for-like sales fell by 0.4% for the period. General merchandise, which includes the clothing division, were down by 1.2%.

Food sales rose by just 0.2%. Both figures were in line with analysts' expectations.

The retailer said underlying profits rose by 6.1% to £284m, although after taking into account one-off items pre-tax profits fell 22.7% to £216m.

 

Those one-off items included almost £27m on revamping UK stores and £22m on European store costs.

M&S said that trading conditions were challenging, with the UK retail sector affected by unseasonal conditions that resulted in high levels of promotions, particularly in the first quarter.

"In the second quarter we took a decision to focus on full price sales and discount less which affected sales performance," the company said.

It added that conditions would remain difficult: "Despite some improvement in consumer confidence, market conditions continue to be challenging in both the UK and the international markets."

The company plans to concentrate on increasing food sales, gross margins and cash generation.

M&S said profit margins at its non-food business had risen by 2.85 percentage points. Given the strong competition from other retailers, chief executive Marc Bolland has focused on improving margins and selling fewer items on promotion rather than trying to boost volumes.

He told 5 live Breakfast the retailer was designing and sourcing more clothing itself, generating savings that would be partly passed on to customers.

International sales fell 0.9% excluding currency movements, or 5.1% in real terms. Performance in Europe was affected as M&S absorbed higher costs rather than raise prices.